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 $940,000. (All currency amounts are in Singapore dollars.) An additional $690,000 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
Labor costs	$	280,000
Material costs	$	92,000

The new machine would require considerable maintenance work to keep it properly adjusted. The companys engineers estimate that maintenance costs would increase by $5,250 per month if the machine were purchased. In addition, the machine would require a $92,000 overhaul at the end of the fifth year.

The new etching machine would be usable for 10 years, after which it would be sold for its scrap value of $190,000. It would replace an old etching machine that can be sold now for its scrap value of $91,000. Tiger Computers, Inc., requires a return of at least 16% on investments of this type. (Ignore income taxes.)

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:
1.	Compute the annual net cost savings promised by the new etching machine. (Omit the "$" sign in your response.)

Annual net cost savings

$

a.

Using the data from requirement (1) and other data from the problem, compute the new machines net present value. (Use the incremental-cost approach.) (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Net present value

$