Subject : Accounting Pina Colada Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to anincreasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-old machine currently in use. The new machine will cost $165,050, and installation will require an additional $3,050. The machine hasa useful life of 10 years and is expected to have a salvage value of $4,045 at that time. The variable cost to operate the new machine is$10.45 per carton compared to the current machine's variable cost of $10.55 per carton, and Pina Colada Vita expects to pack248,000 cartons each year. If the new machine is purchased, Pina Colada Vita will avoid a required $10,425 overhaul of the currentmachine in four years. The current machine has a market value of $12,475.Click here to view the factor table.(a) Calculate the net present value of the new packaging machine. Assume that Pina Colada Vita uses an 9% discount rate. (Forcalculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 58,971.75.Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses e.g. (59,991))Net present value $(b) Do you recommend that Pina Colada Vita purchase the new machine?Yes v10918.13(c) Assume that Pina Colada Vita has adopted a new 12% discount rate. Calculate the net present value of the new packaging machine.(For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g.58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses eg. (59,991))Net present value $8835.08

Decision-making- is the crucial and important role of management which impacts business in the…

Answered: (a) Calculate the net present value of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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