Grouper Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $87,000 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 $9,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $84,000. Martson Molders currently sells a molding machine that will allow Grouper Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $122,000 and would cost $14,000 per year to operate. Grouper Pix's current machine costs only $8,000 per year to operate. If Grouper 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 $20,000 at the end of its ten-year life. Grouper Pix uses straight-line depreciation.

APPENDIX 9.1 Present value of $1 received in n periods. Periods 4% 10% 11% 12% 13% 14% 16% 18% 0.9615 19524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 SEENO 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.3695 0.7432 0.7182 0.6944 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 10.7312 0.7118 0.6931 0.6750 0.6407 0.6186 0.5787 0.8.227 0.7921 0.7629 0.7350 0.7084 016430 06587 176353 0.6133 0.5921 0.3523 05158 10.4823 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 016209 0.3935 0.5674 0.5428 0.5194 04761 0.4371 0.4019 0.7903 0.7462 0.7050 0.6563 0.6302 0.5963 03645 0.5346 0.5066 0.4803 0.4536 0.4104 0.3704 0.3349 17599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4324 10.4251 0.3990 03538 0.3139 0.2791 0.7307 06768 0.6274 10.5820 0.5403 0.5019 0.4565 0.4339 0.4034 10.3762 0.3506 0.3050 0.2660 0.2126 17026 0.6446 0.5919 0.3434 0.3002 0.4604 0.4241 0.3909 10.3073 0.2630 0.2355 0.1938 0.6756 0.6139 0.5384 0.5083 0.4632 0.4224 03853 03522 03270 0.2946 0.2697 02267 0.1911 0.1615 0.6496 0.5847 0.5268 0.4751 0.4289 0.3873 0.3505 0.3173 0.2875 0.2607 0.2366 0.1954 0.1619 0.13-46 0.6246 0.4970 0.4440 10.3971 0.3595 0.3186 0.2858 0.2567 0.2307 10.2076 0.1685 0.1372 0.1122 DTGOOG 0.5309 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1452 0.1163 0.0935 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2320 0.2046 0.1807 0.1597 0.1252 010985 0.0779 0.5353 0.4810 04173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1079 070835 0.06-49 0.5339 0.4581 0.3936 01387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1219 OF6010 0.0704 0.0541 0.5134 0.4363 0.3714 0.3165 0.2703 0.2311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0802 0.0600 0.045 10.4936 0.4135 0.3504 0.2959 0.3502 0.2120 0.1799 0.1528 0.1300 0.1 108 0.0946 010691 010508 0.0376 0.4746 0.3957 SOEED 0.2765 0.2417 0.1945 0.1635 0.1377 0.1161 0.0829 0.0431 10.4364 0.3769 0.3118 0.2584 0.2145 6.1784 0.1486 0.1240 0.1037 0.0868 0.0728 010314 010365 0.0261 $1 APPENDIX 9.2 Present value of an annuity of $1 per period. Periods 4%% 6% 7%% 8% 9% 10%% 11% 12%% 13% 14% 16% 18% 20% 0.9615 10.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.892 0.8850 0.8772 0.8621 0.8475 0.8333 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1,5656 1.5278 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4868 2.4437 24018 2.3612 12.3216 22459 2.1744 2.106: 4.6249 1.5460 3.4651 3.3872 3.3121 3.2397 3.1698 3.1024 3.0873 2.9745 2.9137 2.7982 2.6401 2.SH87 4.4518 4.3295 4.2124 4.1002 3,9927 38897 3.7907 36959 3.6048 3.5172 13.4331 3.2743 3.1272 2.9906 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3,9975 3.8887 36847 3.4976 3.3255 61001 5.7864 5.9824 5.3893 5.2064 4.8684 4.7122 4,4126 3.60-40 6.7127 6.4632 5.9713 5.7406 5.5348 5.3349 5.1.461 4.9676 4.79HM 4.6389 4.3436 4.07 76 3.8372 7.4353 7.1078 6 8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.1317 4.9464 4.8065 4.3080 4.0310 H. 1 109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1440 5,4262 $2101 4.8432 4.4941 4.1925 H. 7605 H. 3064 7/4987 7.1390 6.8052 6,4951 6 2065 5.9377 5.6869 5.4527 5.0286 4.6560 4.3271 7.9427 7.5301 7.1607 6.8137 6.4924 6.1944 5,9176 5.1971 4.79 32 4.4392 HERE 9,9856 9.3930 8.8527 H.3577 7.9038 7.4869 7.1044 64315 6.1218 5.8424 5.3423 4,9095 4.5327 10.5631 9.8980 9.2950 8. 7455 8.2442 7.7862 7.3667 6.9819 6.3025 5.4675 STOOL 4.6106 11.1 184 10.4797 9.7123 9.1079 8.5595 80607 7.1909 6.4624 6.1.422 5.5755 4.6755 4.7296 16 11.6523 10.8378 10.1059 9.4406 8.8514 83126 78237 73792 6.9740 6.6039 6.2651 5.8685 5.1624 17 12.1657 11.2741 10.4773 9.7632 9.1216 85436 80216 7.5498 7.1196 6.7291 6.3729 5.2223 4.7746 12.6593 11.6896 10.8276 10 0591 9.3719 8.7556 8 2014 7.7016 7.2497 6.8399 6.4674 5.8178 5.2732 4.8122 13,1339 12 0853 3 11.1581 10.3356 9.6036 8.9501 8-3649 7.8393 7.3658 6,9:380 6.5504 5.8775 5.3162 4.8.435 13.5904 12.4622 11.4699 10.9540 1 98181 9.1285 85136 7.9633 74604 7.0248 6.6231 5.3527 4.8696 PVAn