Tiger Computers, Inc., of Singapore is considering the purchase of an automated etching machine for use in the production of its circuit boards. The machine would cost $910,000. (All currency amounts are in Singapore dollars.) An additional $660,000 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 $250,000 $ 99,000 Labor costs Material costs The new machine would require considerable maintenance work to keep it properly adjusted. The company's engineers estimate that maintenance costs would increase by $5,030 per month if the machine were purchased. In addition, the machine would require a $99,000 overhaul at the end of the sixth year. The new etching machine would be usable for 10 years, after which it would be sold for its scrap value of $270,000. It would replace an old etching machine that can be sold now for its scrap value of $69,000. Tiger Computers, Inc., requires a return of at least 18% on investments of this type. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the annual net cost savings promised by the new etching machine. Required: 1. Compute the annual net cost savings promised by the new etching machine. Total cost reductions Less increased maintenance costs Annual net cost savings 108,000 36.000 78,500 $ 2a. Using the data from requirement (1) and other data from the problem, compute the new machine's net present value. (Use the incremental-cost approach.) (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.) Year(s) Amount of Cash Flows 18% Factor Present Value of Cash Flows Cost of the machine Installation and software Salvage of the old machine Now Now Now 1-10 6 10 Net present value