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Blossom Inc. manufactures snowsuits. Blossom is considering purchasing a new sewing machine at a cost of $2,45 million. Its existing machine was purchased 5 years ago at a price of $1.8 million; six months ago, Blossom spent $55,000 to keep it operational. The existing sewing machine can be sold today for $245,925. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389.000 2 399,000 3 410,000 4 425,000 5 432,000 6 434,500 7 436,000 The new sewing machine would be depreciated according to the declining balance method at a rate of 20%. The salvage value is expected to be $379,000. This new equipment would require maintenance costs of $94.000 at the end of the fifth year. The cost of capital is 9% Click here to view the factor table. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number ce 45 or parentheses e.s. (45). Round present value answer to 0 decimal places, eg 125. For 7 436,000 The new sewing machine would be depreciated according to the declining balance method at a rate of 20%. The salvage value is expected to be $379,000. This new equipment would require maintenance costs of $94,000 at the end of the fifth year. The cost of capital is 9% Click here to view the factor table Use the net present value method to determine the following: (If net present value is negative then enter with qegative sign preceding the number e.g. -45 or parentheses e.s. (45). Round present value answer to O decimal places, c.9. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided) Calculate the net present value. Net present value $ Determine whether Blossom should purchase the new machine to replace the existing machine? e Textbook and Media Attempts: 0 of 3 used Submit

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