Tiger Computers, Inc. is considering the purchase of an automated etching machine for use in the production of its circuit boards. The machine would cost $900,000. An additional $650,000 would be required for installation costs and for software. Management believes that the automated machine would provide annual reduction in costs: Labor Costs $240,000 $96,000 Material Costs The new machine would require maintenance work to keep it properly adjusted. The company's engineers estimate that maintenance costs would increase by $51,000 per year if the machine were purchased. In addition, the machine would require a $90,000 overhaul at the end of the sixth year. The new etching machine would be usable for 6 years, after which it would be sold for its scrap value of $210,000. It would replace an old etching machine that can be sold now for its scrap value of $70,000. Tiger Computers, Inc., requires a rate of return of at least 12% on investments. Compute the net present value proposed by the new etching machine, using the tables below (Present Value of ($1.00 top): Present Value of Annuity (bottom): Compute the net present value proposed by the new etching machine, usir below (Present Value of ($1.00 top); Present Value of Annuity (bottom): Present Value Table Year 01 02 03 04 05 06 07 OS 09 (Present value of 8% 10% 092593 0.90909 85734 82654 79383 75131 73503 .68301 68058 62092 63017 56147 38349 51361 $4027 46651 50023 42410 46319 38554 12% 0.89286 .79719 .71178 ,63552 56743 .50663 45305 -40388 .36061 .32197 14% 0.87719 76947 .67497 59208 51937 45559 39964 35056 30874 26974 SR 208 1 2 3 4 5 6 1% 0.990 1.970 2.941 3.902 4.853 5.795 2% 0.980 1.942 2.884 3.808 4.713 5.601 396 0.971 1.913 2.829 3.717 4.580 5.417 5% 0.952 1.859 2.723 3.546 4.329 5.076 8% 0.926 1.783 2.577 3.312 3.993 4.623 10% 0.909 1.736 2.487 3.170 3.791 4.355 12% 0.893 1.690 2.402 3.037 3.605 4.111 15% 0.870 1.626 2.283 2.855 3.352 3.785