The management of Opry Company, a wholesale distributor of suntan products, is considering the purchase of a $27,000 machine that would reduce operating costs in its warehouse by $4,400 per year. At the end of the machines 10-year useful life, it will have no scrap value. The companys required rate of return is 12%. (Ignore income taxes.)

Click here to view Exhibit 13B-2, to determine the appropriate discount factor(s) using table.

Required:

1.

Determine the net present value of the investment in the machine

Net present value: $

2.	What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Net cash flow: $