The management of Opry Company, a wholesale distributor of suntan products, is considering the purchase of a $22,000 machine that would reduce operating costs in its warehouse by $3,500 per year. At the end of the machines 9-year useful life, it will have no scrap value. The companys required rate of return is 12%. (Ignore income taxes.)

View Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using table.

Required:
1.	Determine the net present value of the investment in the machine. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate to the nearest dollar amount.)

Item	Year(s)	Cash Flow	12% Factor	Present Value of Cash Flows
Annual cost savings	1-9	3,500
Initial investment	Now	-22,000
Net present value

2.	What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? (Any cash outflows should be indicated by a minus sign.)

Item	Cash Flow	Years	Total Cash Flows
Annual cost savings
Initial investment
Net cash flow