Jestion 4 of 4 073 K&G Company currently sells 105 million units per year of a product to one customer at a price of $3.30 per unit. The customer requires that the product be exclusive and expects no increase in sales during the five-year contract. The company manufacturest product with a machine that it purchased seven years ago at a cost of $712,000. Currently, the machine has a book value of $430,000 but the market value is only $233,000. The machine is expected to last another five years, after which it will have no salvage value Last year, the production variable costs per unit were as follows: Direct materials $1.50 Direct labour 0.60 Variable overhead 0.30 Total variable cost per unit $2.40 The company president is considering replacing the old machine with a new one that would cost $818,000. The new machine is expected to last five years. At the end of that period, the salvage value will be $341,000. The president expects to save 5% of the company's total variable costs with the new machine. Assume that the company's desired rate of return is 12%. Calculate the net present value of the investment. (If the net present value is negative, use either a negative sign preceding the number eg. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124 and final answer to 0 decimal places, eg. 5,275.) Click here to view PV table. Net present value S Using the net present value method, should the company replace the old machine with the new one? The president should replace the equipment based on a positive net present value