(Ignore income taxes in this problem.) Racewheel Corporation is considering the purchase of a machine that would cost $300,000, would last for 7 years,

and would have no salvage value. The machine would reduce labor and other costs by $68,000 per year. The company requires a minimum pretax return of 15% on all investment projects.

Required:

a. Determine the net present value of the project. Show your work!

b. Should the company purchase the machine?