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(Solved): Swift Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The co ...



Swift Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $115,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $9,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $112,500.

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Swifty Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of . Martson Molders currently sells a molding machine that will allow Swifty Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for and would cost per year to operate. Swifty Pix's current machine costs only per year to operate. If Swifty Pix purchases the new machine, the old machine could be sold at its book value of . The new machine is expected to have a salvage value of at the end of its ten-year life. Swifty Pix uses straight-line depreciation. Click here to view the factor table. (a) Calculate the new machine's net present value assuming a 16\% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Net present value eTextbook and Media


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