Ivanhoe Skateboards is considering building a new plant. Gary Al-Saigh, the company's marketing manager, is an enthusiastic supporter of the new plant. Debra Smith, the company's chief financial officer, is not so sure that the plant is a good idea. Currently, the company purchases its skateboards from foreign manufacturers. The following figures were estimated for the construction of a new plant: Cost of plant Annual cash inflows Annual cash outflows Estimated useful life Salvage value Discount rate $7,500,000 $7,500,000 (a) $6,937,500 15 years $1,250,000 Gary believes that these figures understate the true potential value of the plant. He suggests that by manufacturing its own skateboards the company will benefit from a "buy Canadian" patriotism. He also notes that the firm has had numerous quality problems with the skateboards manufactured by its suppliers. He suggests that the inconsistent quality has resulted in lost sales, increased warranty claims, and some costly lawsuits. Overall, he believes sales will be $312,500 higher each year than projected above, and that the savings from lower warranty costs and legal costs will be $125,000 per year. He also believes that the project is not as risky as assumed above, and that a 6% discount rate is more reasonable. Click here to view the factor table. It should be 8% Calculate the project's net present value based on the original projections. (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. If the net present value is negative, use either a negative sign preceding the number eg. -45 or parentheses e.g. (45). Round final answer to 0 decimal places, e.g. 5,275.) Net present value $ Determine whether it should be accepted or not.

Ivanhoe Skateboards is considering buildeng a new plant. Gary AN-Saigh the company's marketing manager, is an enthosiastic supporter of the new plant. Debra Smi th the comparr/s chief financid officer. is not so sure that the plant is a good idea. Currenely, the compary purchases its skateboards trom foreipn manufacturers. The following foures were estimated for the corstraction of a new plant Gary believes that these fieures understate the true potential walue of the plant. He sugsests that by manufacturingits own problems with the skateboards manu actured by its supplen. He sucsests that the inconsistent quality has resulted in lost sales. increased warranty dams and some contly lawsuis. Overall, he believes sales will be $312.500 higher each year than projected above, and that the alvings trom lower warranty costs and legal costs will be 5125 oco per year. He also believes that the project is not as rishy as ascomed above, and that a 6 Kidscount rate is more rearonoble. Clektere toview thatactor uatle (a)