Southside Junk Yard needs to buy a car smasher. The machine would add the following revenues to the business over the next three years:

Year 1 Cash savings $=\$ 30,000$

Year 2 Cash savings plus additional scrap sales $=\$ 40,000$

Year 3 Cash savings plus additional scrap sales $=\$ 55,000$

The initial cost of the machine is $\$ 100,000$. At the end of three years, its salvage value is estimated at $\$ 20,000$. The firm has a cost of capital of 12 percent.

Required: Using the net present value method, determine whether the company should purchase the machine. (Ignore income tax effects.)