Jackie De Paul, the owner of Inn$-$the$-$Maples bed and breakfast, is considering replacing the industrial size washer and dryer she uses

for the business. The current washer and dryer set still works but needs major repairs to extend its useful life.

If Jackie decides to repair the current washer and dryer set she estimates it will be usable for $10$ more years. If she purchases a new

washer and dryer, they will both be usable for $10$ years but would then need to be replaced. The new washer and dryer would be more

energy efficient and the washer would use considerably less water. Her analysis of the two options are shown below.

Jackie computes depreciation on a straight$-$line basis. All equipment purchases are evaluated using an $8\%$ discount rate.

Required:

$($Ignore income taxes.$)$

$1-$a$.$ Determine the present value of net cash flows using the total$-$cost approach. $($Hint: Use Microsoft Excel to calculate the discount

factor$($s$).)$

Note: Enter any cash outflows with a minus sign. Do not round intermediate calculations and round final answer to the nearest

dollar amount.

$1-$b$.$ Should Jackie purchase a new washer and dryer or repair the existing units?

Purchase a new washer and dryer

Repair the existing units

Using the incremental$-$cost approach, determine the net present value in favour of keeping the old units? $($Hint: Use Microsoft Excel

to calculate the discount factor$($s$).)$

Note: Do not round intermediate calculations and round final answer to the nearest dollar amount.