Question
M.T. Glass, Inc. is considering the acquisition of a new piece of heavy machinery to replace an old, outdated machine currently used in its business
M.T. Glass, Inc. is considering the acquisition of a new piece of heavy machinery to replace an old, outdated machine currently used in its business operations. The new machine would cost $180,000 and is expected to last 9 years. The new machine would require a repair of $25,000 in year seven and another repair costing $8,000 in year eight. In addition, purchasing this new machine would require an immediate investment of $30,000 in working capital which would be released for investment elsewhere at the end of the 9 years. The machine is expected to have a $10,000 salvage value at the end of 9 years. The new machine is expected to result in a cost savings of $40,000 per year. M.T. Glass has a cost of capital of 10%. Calculate the net present value (NPV) of the new machine. If your answer is negative, place a minus sign in front of your answer with no spaces in between (e.g., -1234). Do not use decimals in your answer.
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