AquaPro produces water purifiers for the household. Business is good but Derek, the manager, has noticed that customers complain because they find leakages in the plastic nozzles used. AquaPro provides a warranty for each machine and charges $115 for each of them.
AquaPro installed 5,000 machines last month and 20% of them have experienced this leakage problem. Each repair costs $35 for the company.
Derek believes that the problem can be eliminated by adding an extra check valve (costing $2.5/machine). This will reduce the number of purifiers produced every month by a 100 (in order to accommodate the price of the extra check value) but will lower the number of the machines experiencing a leakage from 20% to 5%.

Required

1. Do you think that AquaPro should implement Derek’s idea? Answer with calculations.
2. What are the nonfinancial and qualitative factors that AquaPro may consider in deciding whether to implement the new design?