Cody's Candy Shop would like to buy a new machine (with CCA rate 20%) that will automatically "dip" chocolates as they are formed in the production process.The "dipping" operation is currently done by hand.The machine cost is $150,000 and is estimated to have a useful life of four years and would require replacement parts at the end of year two costing $4,000 including installation.At the end of four years, the machine would be sold for $5,000.Cody estimates that it will cost $7,000 per year to operate the machine compared to the current method by hand costing $15,000 per year.

The machine would result in an increase in production each year of 6,000 boxes with a contribution margin of $2.00 per box.

Cody's tax rate is 35%, and its after-tax rate of return is 9%.

Required:

Show the calculation for determining the net present value of this investment. Explicitly state whether the equipment should be purchased.This calculation should be completed without using excel.