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Ivanhoe Inc. wants to replace its current equipment with new high$-$tech equipment. The existing equipment was purchased $5$ years ago at a cost of $$125,000.$ At that time, the equipment had an expected life of $10$ years, with no expected salvage value. The equipment is being depreciated on a straight$-$line basis. Currently, the market value of the old equipment is $$40,900.$

The new equipment can be bought for $$172,380,$ including installation. Over its $10-$year life, it will reduce operating expenses from $$190,100$ to $$150,000$ for the first six years, and from $$206,500$ to $$191,800$ for the last four years. Net working capital requirements will also increase by $$20,900$ at the time of replacement.

It is estimated that the company can sell the new equipment for $$24,800$ at the end of its life. Since the new equipment's cash flows are relatively certain, the project's cost of capital is set at $10\%,$ compared with $15\%$ for an average$-$risk project. The firm's maximum acceptable payback period is $5$ years.

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$($a$)$

Calculate the initial investment amount.

Initial investment

$

Question $4$ of $7$

$\frac{10}{20}$

$($c$)$

Calculate the project's net present value. $($If the net present value is negative, use either a negative sign preceding the number e$.$g$.-45$ or parentheses e$.$g$.(45).$ For calculation purposes, use $5$ decimal places as displayed in the factor table provided, e$.$g$.1\mathrm{.}25124$ and final answer to $0$ decimal places, e$.$g$.5,275.)$

Net present value $

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$($d$)$

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$)$

$8$:$3$