Monty, Inc. is considering the purchase of a new machine for $550000that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $96250. It is believed that the new machine will reduce downtime because of its reliability. Assume the discount rate is 8%. In order to make the project acceptable, the increase in cash flows per year resulting from reduced downtime must be at least

Present Value of 1 at 8%

9262.8571.7833.7942.577

PV of an Annuity of 1 at 8%

.9264.7353.3125.6813.993