Sheila’s She-Shed Company During her first year of selling She-Sheds, Sheila learned that customers wanted windows in the sheds. (She had expected that the glass door in the shed would suffice for windows.) Initially, she met this need by having her supplier, Fred’s Garden Shelters, install the windows in the sheds that Sheila’s She-Shed Company converted into specialty sheds. For three windows, Fred charged $300. This made the wholesale cost of the sheds $1,100. She would have to raise her retail price or find a cheaper way to install the windows. She hired Michael, a carpenter, to install the windows for her. He was efficient but could not keep up with Sheila’s sales. She would have to hire a second carpenter to keep up with the demand for 100 She-Sheds per year. Onto the scene came Sam, the friendly equipment salesperson. For one week only, he had a special price on an Automatic Window Machine, which would automatically cut out the holes for the windows, cut the lumber and glass to make the windows, install them, paint the frames, and wash the windows. Sheila made some quick calculations. They went like this: Sam’s machine would install windows in a She-Shed in one hour. It would require some lumber, glass, electricity, maintenance, and only one person to operate it. Sheila estimated that for each house, the expenses of operating the machine would be $100, composed of: Item Cost Michael’s salary for 1 hour $12 Michael’s social security, unemployment tax, medical and life insurance, vacations, etc., expenses for one hour $8 Lumber and glass $65 Maintenance $10 Electricity $5 Total Cost per She-Shed $100 At a glance, it appears that the machine would provide large savings: a window cost of $100 per She-Shed against the $300 Fred’s Sheds charges. However, there is more to consider. Sheila will have to pay $55,000 upfront for the machine from her pocket or a bank loan. The expected useful life of Sam’s Automatic Window Machine is five years. Assignment: What is the Net Present Value with assuming an 8% financing rate? Is the purchase of Sam’s Automatic Window Machine a good investment? What are some other factors or unknowns that might be considered? Any risks to consider?