The manager must decide if she should buy new equipment or get the equipment fixed. The equipment will produce a higher quality product, so it is expected to have annual incremental revenue of $18,000. In addition, the new equipment would operate in a more efficient manner, saving $8,000 in annual operating costs. Below are the facts for this decision:

	New equipment	Fixed old equipment
Annual revenue	$76,000	$58,000
Annual operating costs	($4,000)	($12,000)
Net annual cash inflows	$72,000	$46,000
	Buy new equipment	Fix old equipment
Initial cost	$60,000	$26,000
Useful life	5 years	5 years
Salvage value	$5,000	$2,000
Year 3 maintenance	$10,000	$7,000

The incremental annual operating income gained by buying new equipment is $60,000.

Assume a discount rate of 11.5%.

Compute an NPV analysis for buying new equipment and fixing old equipment.

Round all present values to the nearest dollar. Enter outflows as negative numbers and inflows as positive numbers. Negative numbers should be entered with a negative sign, not brackets. (18 marks - 1 mark per answer)