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 $243,956. 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 $391,000

2) 399,900

3) 410,300

4) 425,600

5) 432,100

6) 435,200

7) 437,300

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 $379,400. This new equipment would require maintenance costs of $98,600 at the end of the fifth year. The cost of capital is 9%.

Use the net present value method to determine the following:(If net present value is negative thenenter 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.

Net present value$

Determine whether Hillsong should purchase the new machine to replace the existing machine?