Flint Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $95,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 9,000 frames per year, generating a total contribution margin of $92,500. Martson Molders currently sells a molding machine that will allow Flint Pix to increase production and sales to 12,000 frames per year. The machine, which has a ten-year life, sells for $138,000 and would cost $14,000 per year to operate. Flint Pixs current machine costs only $8,000 per year to operate. If Flint Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,200 at the end of its ten-year life. Flint Pix uses straight-line depreciation.

(a)Calculate the new machines net present value assuming a 14% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)Net present value$______?_______

(b)Use Excel or a similar spreadsheet application to calculate the new machines internal rate of return. (Round answer to 2 decimal places, e.g. 1.25%.)

Internal rate of return ______?___%

(c)Calculate the new machines payback period. (Round answer to 2 decimal places, e.g. 1.25.)

Payback period___?___years