Stone Corporation Is Interested in Purchasing a State-Of-The-Art Widget Machine $\text { Compute the net pressent value of the new machine }$

Stone Corporation is interested in purchasing a state-of-the-art widget machine for its manufacturing plant.The new machine has been designed to basically eliminate all errors and defects in the widget-making production process.The new machine will cost $150,000,and have a salvage value of $70,000 at the end of its seven-year useful life.Stone has determined that cash inflows for years 1 through 7 will be as follows: $32,000;$57,000;$15,000;$28,000;$16,000;$10,000,and $15,000,respectively.Maintenance will be required in years 3 and 6 at $10,000 and $7,000 respectively.Stone uses a discount rate of 11 percent and wants projects to have a payback period of no longer than five years.
Present value tables or a financial calculator are required.
a. $\text { Compute the net pressent value of the new machine }$
b. $\text { Compute the firm's profitability index }$
c. $\text { Compute the payback period }$
d. $\text { Evaluate this investment proposal for Stone Company. }$

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, and a payback period of over ss years....

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