manufactures baby furniture, clothing, strollers, and accessories. In the current year the company plans on purchasing a new machine to improve the quality and efficiency of production.

Stork Stuff

Stork Stuff has prepared estimates of future cash flows over the following four years, at which point it will sell the machine for $

9,500

9,500. The company focuses on tax minimization and calculated depreciation over the four years using the straight-line method, a useful life of four years, and a residual value of $0.

Requirement 1. Calculate the net present value of the investment. Assume the CCA tax rate is

20

20%. (Use factors to three decimal places, X.XXX. Use a minus sign or parentheses for a negative net present value. Round your final answer to the nearest whole dollar.)

The net present value of the investment is $

nothing

.

Requirement 2. Should the company purchase the new machine?

The company

should

should not

purchase the machine because the NPV is

negative.

positive.

zero.