Diamond \& Turf Inc. is considering an investment in one of two machines. The sewing...
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Diamond \& Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 150 baseballs per hour to sewing 290 per machine for the golf ball line. The packing machine will reduce packing labor cost. The labor cost saved is equivalent to $21 per hour. The sewing machine will cost $260,000, have an 8-year life, and will operate for 1,800 hours per year. The packing machine will cost $85,000, have an 8 -year life, and operate for 1,400 hours per year. Diamond \& Turf seeks a minimum rate of return of 15% on its investments. a. Determine the net present value for the two machines. Use the table of present values of an annuity of $1 above. Round to the nearest dollar. Sewing Machine Packing Machine Present value of annual net cash flows Amount to be invested Net present value b. Determine the present value index for the two machines. Round to two decimal places. Sewing Machine Packing Machine Present value index
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