Stirling Windows Inc. of Hong Kong is considering purchasing an automated cutting machine for use in the production of its stained-glass windows. The machine would cost $940,000. (All currency amounts are in Hong Kong dollars.) An additional $690,000 would be required for installation costs and for software. Management believes that the automated machine would provide substantial annual reductions in costs, as shown below:

Annual Reduction in Costs $280,000 $ 92,000 Labour costs Material costs The new machine would require considerable maintenance work to keep it in proper adjustment. The company's engineers estimate that maintenance costs would increase by $5,250 per month if the machine were purchased. In addition, the machine would require a $92,000 overhaul at the end of the fifth year. The new cutting machine would be usable for nine years, after which it would be sold for its scrap value of $190,000. It would replace an old cutting machine that can be sold now for its scrap value of $91,000. Stirling Windows requires a return of at least 16% on investments of this type. (Ignore income taxes.) Required: 1. Compute the net annual cost savings promised by the new cutting machine. Annual net cost savings 2-a. Using the data from requirement 1 above and other data from the problem, compute the new machine's net present value. (Use the incremental-cost approach.) (Hint: Use Microsoft Excel to calculate the discount factor(s).) (Do not round intermediate calculations and round your final answer to the nearest dollar amount. Negative amount should be indicated by a minus sign.) Net present value