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Hillsong Inc. m anufactures snowsuits Hilsong is considering purchasing a rew sewing machine at a cost of $2 45 milon. Its existing machine was purchased fve years ago at a price of $1 8 milion; sc months ago, Hilsong spent $55,000 to keep it operational. The existing sewng machine can be sold today for $241,702. The new sewing machine would require a one-bme, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,100 400,600 2 410,600 3 425,000 4 432,900 6 434,500 7 436,400 The new sewing machine would be depreciated according to the dedining-balance method at a rate of 20% The salvage value is expected to be $379,900 This new equpment would require maintenance costs of $94,600 at the end of the fifth year The cost of capital is 9% Click here to ew PV table Use the net prsent value method to determine the following: (If net present value is negative then enter with negative sign preceding the number eg.-45 or parentheses e.g. (45). Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Calculate the net present value. Net present value 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 $379,900 This new equipment would require maintenance costs of $94,600 at the end of the fifth year. The cost of capital is 9 %. Click here to view EV table Use the net present value method to determine the following: (If net present vakue is negative then enter with negative sign preceding the number e.g. -45 or parentheses ea. (45). Round present value answer to 0 decimal places, e.g. 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 Hlsong should purchase the new machine to replace the existing machine

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