Data relating to Randall Ltd.'s single product are as follows:

Selling price

$5.47

Direct materials

0.82

Direct labour

0.81

Overhead (60% fixed)

1.00

Gross Profit

$2.84

The company currently produces 51937 units.Randall Ltd. is considering purchasing a new machine that is expected to decrease variable costs by 17%. The expected useful life of the new machine is 10 years.

Assuming a weighted average cost of capital of 8%, what is the net present value of the increase in contribution margin relating to this investment?

Select one:

a.$120268

b.There is a decrease in the contribution margin.

c.$196587

d.$8302