SarasotaPix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $109,000for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $8,000overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells15,000frames per year, generating a total contribution margin of $106,500.

Martson Molders currently sells a molding machine that will allowSarasotaPix to increase production and sales to20,000frames per year. The machine, which has a ten-year life, sells for $144,000and would cost $14,000per year to operate.SarasotaPix's current machine costs only $8,000per year to operate. IfSarasotaPix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000at the end of its ten-year life.SarasotaPix uses straight-line depreciation.

(a) Calculate the new machine's net present value assuming a16% discount rate.(For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)

Net present value$

enter the net present value in dollars rounded to 0 decimal places

(b)Use Excel or a similar spreadsheet application to calculate the new machine's internal rate of return.(Round answer to 2 decimal places, e.g. 1.25%.)

Internal rate of return enter the internal rate of return in percentages rounded to 1 decimal place

%

(c) Calculate the new machine's payback period.(Round answer to 2 decimal places, e.g. 1.25.)

Payback period