CE Fontane Copy U Wiate Over 5 CUCK HERE TO SAVE YOUR WORK SA D F H 1 UN Stirling Windows Inc. is considering purchasing an automated cutting machine for use in the production of its stained glass windows E replace the current cutting machine which will be sold. The new machine will require a major overhaul at the end of the sixth year and will be disposed of at the end of its nine year useful life. Below is the information management has on the new cutting machine and the old cutting machines 2 Cost of the machine 5800,000 Installation and software costs $550,000 5 Annual reduction in labour costs PV Factor = 1/((1+y) *PVratenperom, pell $140,000 6 Annual reduction in material costs $95.000 IRR(arrayvals, estimate) 2 Increase in monthly maintenance costs IRR(arrayals) $4.500 8 Cost of overhaul $80,000 *PMTratenper,pval (fvall.type 9 Salvage value of the new machine $238.000 10 Salvage value of the old machine $60,000 11 Required rate of return 1296 12 13 Required: 14 1 Compute the net annual cost savings promised by the new cutting machine. (1 mark) 25 16 17 18 14 NPV 2d Now 4 2. Using the answer from part 1 and the other data provided, calculate the net present value of the new machine. (11 mars Income taxes 23 Item Year(s) Amount of the cash flows Present value of the cash flows 25 26 27 28 29 30 31 3. Assume that management can Identify severalatangible benefits associated with the new machine. What dollar value per year would management have to attach to these intangible benefits in order to make the new cutting machine an acceptable investment? (1 mark) 32 33 Intangible benefits per year 5 64 will the Internal rate of return he nepative? 11 marki NPV 2d Now