Nautical Creations is one of the largest producers of miniatureships in a bottle. An especially complex part of one of the shipsneeds special production equipment that is not useful for otherproducts. The company purchased this equipment early in 2016 for$200,000. It is now early in 2020, and the manager of the ModelShips Division, Jeri Finley, is thinking about purchasing newequipment to make this part. The current equipment will last forsix more years with zero disposal value at that time. It can besold immediately for $30,000. The following are last year's totalmanufacturing costs, when production was 8,800 ships: Directmaterials $33,000 Direct labor 30,800 Variable overhead 14,080Fixed overhead 41,360 Total $119,240 The cost of the new equipmentis $145,000. It has a six year useful life with an estimateddisposal value at that time of $45,000. The sales representativeselling the new equipment stated, "The new equipment will allowdirect labor and variable overhead combined to be reduced by atotal of $2.15 per unit." Finley thinks this estimate is accurate,but also knows that a higher quality of direct material will benecessary with the new equipment, costing $0.23 more per unit.Fixed overhead costs will decrease by $4,200. Finley expectsproduction to be 9,250 ships in each of the next six years. Assumea discount rate of 5%.

1. What is the difference in net present values if NauticalCreations buys the new equipment instead of keeping their currentequipment?