The new sewing machine would be depreciated according to

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Reference no: EM13581476

Hiland Inc. manufactures snowsuits. Hiland is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hiland spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,919. 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	$389,400
	2	399,100
	3	410,400
	4	425,100
	5	433,200
	6	435,000
	7	437,900

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 $380,200. This new equipment would require maintenance costs of $95,500 at the end of the fifth year. The cost of capital is 9%

Calculate the net present value

Reference no: EM13581476

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