Course Contents MODULE 2 PROBLEMS PROBLEM OG CAPITAL BUDGETING... - Timer Notes Evaluate Feedback Print Info Nautical Creations is one of the largest producers of miniature ships in a bottle. An especially complex part of one of the ship needs special production equipment that is not useful for other products. The company purchased this equipment early in 2016 for $200,000. It is now early in 2020, and the manager of the Model Ships Division, Jeri Finley, is thinking about purchasing new equipment to make this part. The current equipment will last for six more years with rere disposal value at that time. It can be sold immediately for $25,000. The following are last year's total manufacturing costs, when production was 8.000 ships! $30,000 Variable overhead Fixed overhead Total $100.800 The cost of the new equipment is $140,000. It has a six year useful life with an estimated disposal value at that time of $40,000. The sales representative selling the new equipment stated, "The new equipment will allow direct labor and variable overhead combined to be reduced by a total of 2.20 per ut. Finley think this estimate is accurate, but also know that a higher quality of direct material will be necessary with the new equipment, costing $0.17 more per ut. Fixed overhead costs wil decrease by $3,900. Finey expects production to be 8,500 ships in each of the next six years. Assume a discount rate of 5% REQUIRED 1. What is the difference in ne present values Nautical Creations by the new equipment instead of keeping the current equipment St Anne Tress Meneral reference on what is marked as NEW