Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $ 241,378 . The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $ 390,000 2 400,500 3 410,200 4 425,800 5 433,600 6 434,500 7 436,900 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $ 380,000 . This new equipment would require maintenance costs of $ 96,200 at the end of the fifth year. The cost of capital is 9%.

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Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Calculate the net present value.

TABLE 3 Present Value of 1 96154 .95238 94340 0.93458 .92593 91743 90909 90090 89286.86957 68 82645 81162 .79719 .75614 88900 86384 83962 0.81630 79383 .77218 .75132 73119 .71178 65752 65873 63552 57175 82193 78353 74726 0.71299 68058 .64993 62092 .59345 56743 49718 .43233 75992 71068 66506 0.62275 58349 54703 51316 48166 45235 37594 4339340388 32690 70259 6446.59190 0.54393 .50025 46043 42410 39092 3606 28426 67556 61391 .55839 0.50835 46319 422438554 .35218 .32197 24719 53 3504931728 .28748 21494 .62460 .55684 .49697 0.44401 .39711 .35554 .31863 .28584 .25668 .18691 60057 53032 46884 0.41496 36770 32618 .28966 2575 22917 .16253 26333 23199 20462 14133 55526 48102 41727 0.36245 31524.27454 23939 .20900 .18270 12289 5339 45811 .39365 0.33873 29189 25187 .21763 18829 .16312 .10687 51337 43630 .37136 0.31657 27027 .23107 .19785 .16963 .14564 .09293 .49363 .41552 .35034 0.29586 .25025 .21199 .17986 .15282 13004 ,08081 .47464 .39573 .33051 0.27615 .23 171 .19449 .16351 .13768 .11611 .07027 14864 12403 10367 06110 90703 .89000 0.87344 .85734 .84168 .82645 85480 82270 .79209 0.76290 73503 70843 68301 6 7903 74622 70496 0.66634 63017 .59627 .56447 .53464 .50663 73069 .67684 .62741 0.58201 .54027 .50187 .46651 10 .64958 58468 .52679 0.47509 42888 38753 35049 .31728 28748 57748 .50507 44230 0.38782 34046 29925 2 45639 37689 31180 0.25842 21455