PROBLEM $7-22$ Net Present Value AnalysIs

The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation

currently is done largely by hand. The machine the company is considering costs $$120,000.$ The manufacturer estimates that the machine

would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost

$$9,000,$ including installation. After five years, the machine could be sold for $$7,500.$

The company estimates that the cost to operate the machine will be $$7,000$ per year. The present method of dipping chocolates costs

$$30,000$ per year. In addition to reducing costs, the new machine will increase production by $6,000$ boxes of chocolates per year. The

company realizes a contribution margin of $$1\mathrm{.}50$ per box. A $20\%$ rate of return is required on all investments.

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. Round all dollar amounts to the nearest whole dollar.

PLEASE ANSWER ALL PARTS AND IN EXCEL FORM. THANK YOU IN ADVANCED!