MVP Sports Equipment Company is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 130 baseballs per hour to sewing 230 per hour. The contribution margin is $0.40 per baseball. Assume that any increased production of baseballs can be sold. The second machine is an automatic packing machine for the golf ball line. The packing machine will reduce packing labor cost. The labor cost saved is equivalent to $24 per hour. The sewing machine will cost $265,900, have an eight-year life, and will operate for 1,400 hours per year. The packing machine will cost $124,500, have an eight-year life, and will operate for 1,200 hours per year. MVP seeks a minimum rate of return of 10% on its investments.

Present Value of an Annuity of $1 at Compound Interest
Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	1.833	1.736	1.690	1.626	1.528
3	2.673	2.487	2.402	2.283	2.106
4	3.465	3.170	3.037	2.855	2.589
5	4.212	3.791	3.605	3.353	2.991
6	4.917	4.355	4.111	3.785	3.326
7	5.582	4.868	4.564	4.160	3.605
8	6.210	5.335	4.968	4.487	3.837
9	6.802	5.759	5.328	4.772	4.031
10	7.360	6.145	5.650	5.019	4.192

a. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. If required, round to the nearest dollar.

	Sewing Machine		Packing Machine
Present value of annual net cash flows	$		$
Less amount to be invested
Net present value	$		$

b. Determine the present value index for the two machines. Round to two decimal places.

	Sewing Machine	Packing Machine
Present value index