Vanea Production Inc (VPI) makes parts for the rail industry. Although the rail industry has been somewhat volatile over the years VPI is currently very busy and operating at full capacity. VPI has an opportunity to purchase a new piece of equipment (a B26G) that is more flexible than the current machine allowing them to produce various kinds of parts rather than just one. The B26G is also faster than the old machine with an increase production capacity of 30%. VPI has determined that they can swap out the old machine for the B26G very quickly so they would not lose any of their current jobs. However, there would be a cost of $10,000 to dispose of the old machine and an estimated cost of terminating three operators of $50,000. Reduced wage costs are estimated at $190,000 per year as the number of people involved in manufacturing would drop from 9 to 6. Maintenance costs on the B26G are forecasted at $10,000 per year for the final 6 years while the first year is covered by warranty. Maintenance costs on the current machine average $14,000 per year. Utility costs are expected to decrease by $1400 per month.

Rachel Vanea would have to borrow $150,000, which, along with her current cash in the bank, would give her enough to purchase the B26G at a cost of $550,000. The purchase payment is due in two payments, one upfront and the second one of $225,000 at the end of year one. Annual interest payments on the loan are payable at the end of each year for 5 years at an annual loan interest rate of 6%. There is a lump sum principle repayment at the end of the year 5 for the whole loan. The estimated life on the B26G is 7 years with an estimated salvage value of $58,000. Her current machine would also last 7 years but would require repairs at the end of year estimated at $6,000 in year 1, $7,500 in year 3, $8,000 in year 5, and $11,500 in year 7; it will have no residual value. Vanea requires a 12% rate of return on all investments.

What is the NPV if VPI decides to purchase the B26G? Show your solutions to this question in an excel sheet.