Vorteck Inc. manufactures snowsuits. Vorteck is considering purchasing a new sewing machine at a cost of $2.5 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Vorteck spent $55,000 to keep it operational. The existing sewing machine can be sold today for $260,000. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7:
Year 1 .... $390,000
Year 2 ..... 400,000
Year 3 ..... 411,000
Year 4 ..... 426,000
Year 5 ..... 434,000
Year 6 ..... 435,000
Year 7 ..... 436,000

The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $380,000. This new equipment would require maintenance costs of $95,000 at the end of the fifth year. The cost of capital is 9%.

Instructions
Use the net present value method to determine whether Vorteck should purchase the new machine to replace the existing machine, and state the reason for your conclusion.