Current Attempt in Progress K&G Company currently sells 1.15 million units per year of a product to one customer at a price of $3.30 per unit. The customer requires that the product be exclusive and expects no increase in sales during the five-year contract. The company manufactures the product with a machine that it purchased seven years ago at a cost of $737,000. Currently, the machine has a book value of $434,000 but the market value is only $244,000. The machine is expected to last another five years, after which it will have no salvage value. Last year, the production variable costs per unit were as follows: $220 0.60 Direct materials Direct labour Variable overhead Total variable cost per unit 0.20 $3.00 The company president is considering replacing the old machine with a new one that would cost $812,000. The new machine is expected to last five years. At the end of that period, the salvage value will be $347,500. The president expects to save 4% of the company's total variable costs with the new machine Assume that the company's desired rate of return is 11% Calculate the net present value of the investment.( the net present valuels negative, use either a negative sign preceding the number es.-45 or parentheses es (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, cs 1.25124 and final answer to decimal places, eg. 5,275) Click here to view PV table. Net present value $ Using the net present value method, should the company replace the old machine with the new one? The president replace the equipment based on a vnet present value e of a Single Sum) FVF = (1 + i) (n) Periods 2% 2.5% 3% 4% 5% 6% 8% 9% 10% 11% 12% 15% 1 1.02000 1.02500 1.03000 1.04000 1.05000 1.06000 1.08000 1.09000 1.10000 1.11000 1.12000 1.15000 2 1.04040 1.05063 1.06090 1.08160 1.10250 1.12360 1.16640 1.18810 1.21000 1.23210 1.25440 1.32250 3 1.06121 1,07689 1.09273 1.12486 1.15763 1.19102 1.25971 1.29503 1.33100 1.36763 1.40493 1.52088 4 1.08243 1.10381 1.12551 1.16986 1.21551 1.26248 1.36049 1.41158 146410 1.51807 1.57352 1.74901 5 1.10408 1.13141 1.15927 1.21665 1.27628 1.33823 1.46933 1.53862 1.61051 1.68506 1.76234 2.01136 6 1.12616 1.15969 1.19405 1.26532 1.34010 1.41852 1.58687 1.67710 1.77156 1.87041 1.97382 2.31306 7 1.14869 1.18869 1.22987 1.31593 1.40710 1.50363 171382 1.82804 1.94872 2.07616 2.21068 2.66002 B 1.17166 1.21840 1.26677 136857 1.47746 1.59385 1.85093 199256 2.14359 2.30454 2.47596 3.05902 9 1.19509 1.24886 1.30477 1,42331 1.55133 1.68948 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788 10 1.21899 1.28008 1.34392 1.48024 1.62889 179085 2.15892 2.36736 2.59374 2.83942 3.10585 404556 11 1.24337 1.31209 1.38423 1,53945 1.71034 1.89830 2.33164 2.58043 285312 3.15176 3.47855 4.65239 12 1.26824 1.34489 1.42576 1.60103 1.79586 2.01220 2.51817 2.81267 3.13843 3.49845 3.89598 5.35025 13 129361 1,37851 146853 1.66507 1.88565 2.13293 271962 3.06581 3.45227 3.88328 4.36349 6.15279 14 1.31948 1.41297 1.51259 1.73168 1.97993 2.26090 2.93719 3.34173 3.79750 4.31044 4.88711 7.07571 15 1.34587 1.44830 1.55797 1.80094 2.07893 2.39556 3.17217 3.64248 4.17725 4.78459 5.47357 8.13706 16 1.37279 1.48451 1.60471 1.87298 2. 18287 2.54035 3.42594 3.97031 4.59497 5.31089 6.13039 9.35762 17 1.40024 1,52162 1.65285 1.94790 229202 2.69277 3.70002 4.32763 5,05447 5.89509 6.86604 10.76126 18 1.42825 1.55968 1.70243 202582 240662 285434 3.99602 4.71712 5.55992 6.54355 7.68997 12 37545 19 1.45681 1.59865 1.75351 2.10685 2.52695 3.02560 431570 5.14166 6.11591 726334 8.61276 14 23177 20 1.48595 1.63882 1.80611 2.19112 2.65330 3.20714 4.66096 5.60441 6.72750 8,06231 9.64629 16.36654 20 21 22 23 24 25 26 27 28 29 30 31 32 33 134 35 38 37 38 39 40 1.48595 1.63862 1.80611 219112 2.65330 3.20714 4.66096 5.60441 6.72750 8.06231 9.64629 16.36654 1.51567 1.67958 1.86029 2.27877 2.78596 3.39956 5.03383 6.10881 7.40025 8.94917 10.80385 18.82152 1.54598 1.72157 1.91610 2.36992 2.92526 3.60354 5.43654 6.65860 8.14028 9.93357 12 10031 21.64475 1.57690 1.76461 1.97359 2.46472 3.07152 3.81975 5.87146 7.25787 8.95430 11,02627 13,55235 2489146 1.60844 1.80873 2.03279 2.56330 3.22510 4.04893 6.34118 791108 9.84973 12.23916 15.17863 28.62518 1.64061 1.85394 2.09378 2.66584 3.38635 429187 6.84847 8.62308 10.83471 13.58546 17.00006 32.91895 1.67342 1.90029 2.15659 2.77247 3.55567 4.54938 7.39635 9.39916 11.91818 15.07986 19.04007 37.85680 170689 1.94780 222129 2.88337 3.73346 482235 7.98806 10.24508 13.10999 16.73865 21.32488 43.53532 1.74102 1.99650 2.28793 299870 3.92013 5.11169 8.62711 11.16714 14.42099 18.57990 23.88387 50.06561 1.77584 2.04641 235657 3.11865 4.11614 5.41839 9.31727 12.17218 15.86309 20.62369 26.74993 57.57545 1.81136 2.09757 242726 3.24340 432194 5.74349 10.06266 13.26768 17.44940 22.89230 29.95992 66.21177 1.84759 2.15001 2.50008 3.37313 4.53804 6.08810 10.86767 14.46177 19.19434 25.41045 33.55511 76.14354 1.88454 2.20376 257508 3.50806 4.76494 6.45339 11.73708 15.76333 21.11378 28 20560 37 58173 87.56507 1.92223 2 25885 2.65234 3.64838 5.00319 6.84059 1267605 17.18203 23.22515 31,30821 4209153 100.69983 1.96068 2 31532 273191 3.79432 5.25335 725103 13.69013 18.72841 2554767 34,75212 47.14252 115.80480 1.99989 237321 2.81386 3.94609 5.51602 7.68609 14.78534 20.41397 28 10244 38 57485 52.79962 133. 17552 203989 243254 2 89828 4.10393 5.79182 8.14725 15.96817 22.25123 30.91268 42.81808 59.13557 153.15185 2.08069 249335 2.98523 4.26800 6,08141 8.63609 17 24563 24 25384 34.00395 47.52807 66.23184 176,12463 2.12230 2.55568 3.07478 4.43881 6.38548 9.15425 18.62528 26.43668 37.40434 52.75616 74.17966 202.54332 2.16474 261957 3.16703 4 61637 6.70475 9.70351 20.11530 28.81598 41.14479 58.55934 83.08122 232.92482 220804 268506 3.26204 4.80102 703999 10.28572 21 72452 31.40942 45 25926 65.00087 93.05097 267.86355