Net Present Value Decision Making Problem The Auto Company is considering the purchase of a new car making machine to replace its present machine. The new machine which would cost $650,000, is expected to have a useful life of 15 years and a salvage value of $15,000 at the end of its useful life. If the new machine is purchased the present (old) machine would be sold today to another company for $5,000. The new machine is expected to increase yearly production by 6,000 units and each additional car increases cash profits by $15.00 per unit. The new machine requires annual operating costs of $17,000 while the present (old) machine has yearly operating costs of $20,000. Finally, if the new machine is purchased it would require a $15,000 overhaul at the end of the seventh year in order to keep it running in top condition for the remaining years. REQUIRED: Assuming Auto Company has a cost of capital of 12%, determine whether or not the new machine should be purchased. Use the NPV method and follow the format below. Item Years Amt of Cash Flow PV Factor PV of Cash Flows f 7 Jolay Should the proposal be accepted or rejected? Why? NPV =