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The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dippin operation currently is done largely by hand. The machine the company is considering costs $$190,000.$ The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the $lon$ the third year. These parts would cost $$11,100,$ including installation. After five years, the machine could be sold for $$8,000$

The company estimates that the cost to operate the machine will be $$9,100$ per year. The present method of dipping choc costs $$51,000$ per year. In addition to reducing costs, the new machine will increase production by $7,000$ boxes of chocola year. The company realizes a contribution margin of $$1\mathrm{.}55$ per box. A $21\%$ rate of return is required on all investments.

Click here to view Exhibit $7$B$-1$ and Exhibit $7$B$-2,$ to determine the appropriate discount factor$($s$)$ using tables.

Required:

What are the annual net cash inflows that will be provided by the new dipping machine?

Compute the new machine's net present value.

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