Marinis Corporation is considering buying a brand new machine and has gathered the following data:

Investment		$105,100
Estimated life		5 years
Estimated annual cash inflows		$30,100
Estimated annual cash outflows		$10,000

Salvage value for the machine is estimated to be zero. Click here to view PV table.

Calculate the net present value of the machine assuming a 6% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.)

Net Present Value

$

Should the company buy the machine based on your results?

YesNo

Further investigation reveals that there would be a sales increase of $7,000 annually as a result of an increase in quality from the customers perspective and a cost reduction of $2,800 annually as a result of lower warranty claims. Considering these additional facts, calculate the Net Present Value of the machine. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.)

Net Present Value

$

Should the company buy the machine?

YesNo