2.

Gammaro Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $900,000. Projected net cash inflows are as follows: (Click the icon to view the projected net cash inflows.) (Click the icon to view the present value table.) (Click the icon to view the present value annuity table.) (Click the icon to view the future value table.) 3 (Click the icon to view the future value annuity table.) Read the requirements. Requirement 1. Compute this project's NPV using Gammaro Industries' 14% hurdle rate. Should Gammaro Industries invest in the equipment? Why or why not? Begin by computing the project's NPV (net present value). (Round your answer to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) Net present value $ Gammaro Industries invest in the equipment because its NPV is Requirement 2. Gammaro Industries could refurbish the equipment at the end of six years for $106,000. The refurbished equipment could be used one more year, providing $76,000 of net cash inflows in Year 7. In addition, the refurbished equipment would have a $54,000 residual value at the end of Year 7. Should Gammaro Industries invest in the equipment and refurbish it after six years? Why or why not? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Calculate the additional NPV provided from the refurbishment. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) Additional NPV provided from refurbishment $ NPV. The refurbishment NPV is to overcome the original NPV of the equipment. Therefore, the refurbishment alter Gammaro Industries' original decision The refurbishment provides a regarding the equipment investment. UI ILS pruuul LIUR process. The manualurity equipment le 0 Data Table Year 1 Year 2... Year 3 .... Year 4 Year 5 Year 6 ...... $265,000 $253,000 $226,000 $211,000 $200,000 $173,000 Print Done neyt question i Reference Present Value of $1 Periods 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 6% 0.943 0.890 0.840 0.792 0.747 8% 0.926 0.857 0.794 0.735 0.681 10% 0.909 0.826 0.751 0.683 0.621 12% 0.893 0.797 0.712 0.636 0.567 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 16% 0.862 0.743 0.641 0.552 0.476 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.888 0.871 0.853 0.837 0.820 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.837 0.813 0.789 0.766 0.744 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.705 0.665 0.627 0.592 | 0.558 0.630 0.583 0.540 0.500 0.463 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.410 0.354 0.305 0.263 0.227 0.308 18% 20% 0.847 0.833 0.7180.694 0.609 0.579 0.516 0.482 0.437 0.402 0.370 0.335 0.314 0.279 0.266 0.233 0.225 0.194 0.191 0.162 0.162 0.135 0.137 0.112 0.116 0.093 0.270 0.804 0.788 0.773 0.722 0.701 0.681 0.527 | 0.429 0.497 | 0.397 0.469 0.368 0.237 0.208 0.182 0.195 0.168 0.145 0.870 | 0.758 | 0.661 | | 0.577 10.505 0.442 0.340 | 0.263 | 10.205 | 0.160 | 0.125 | 0.099 | 0.078 0.861 0.743 | 0.642 | 0.555 0.48] 0.417 0.315 | 0239 | 0.183 10.140 | 0.065 0.820 0.673 | 0.554 | 0.456 | 10.377 | 0.312 0215 | 0.149 | 0.104 | | 0.073 | 0.051 | 0.037 | 0.026 0.80 0.610 | 0.478 | 0.375 0295 0233 0.146 | 0.092 | 0.059 0.038 | 0.024 10.016 | 0.010 0.742 | 0.552 | 0.412 | 0.308 | 0.231 | 0.174 | 0.099 | 0.057 | 0.03 | 0.020 | 0.012 | 0.007 0.004 0.672 | 0.453 | 0.307 | 0.208 | 0.142 | 0.097 | 0.046 | 0.022 | 0.011 1 0.005 | 0.003 | 0.001 | 0.001 Periods 1% 0.990 1.970 2.941 Ovo AWN + 3.902 4.853 5.795 6.728 7.652 2% 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 Present Value of Annuity of $1 3% 4% 5% 6% 8% 10% 0.971 0.9620.952 0.943 0.926 0.909 1913 1.886 1.859 1.833 1.783 1.736 2.829 2.775 2.723 2.673 2.577 | 2.487 3.717 3.630 3.546 3.465 3.312 3.170 4.580 4.452 4.329 4.212 3.993 3.791 5.417 5.2425.076 4.917 4.623 4.355 6.230 6.002 5.786 5.582 5.206 4.868 6.733 6.463 6.210 5.747 5.335 7.786 7.435 7.108 6.802 6.247 5.759 8.530 8.111 7.722 7.360 6.710 6.145 9.253 8.760 8.306 7.887 7.139 6.495 9.954 9.3858.863 8.384 7.536 6.814 10.6359.9869.394 8.853 7.904 7.103 12% 14% 0.893 0.877 1.6901.647 2402 2.322 3.037 2.914 | 3.605 3.433 4.111 3.889 4.564 4.288 4.968 4.639 5.328 4.946 5.650 5.216 5.938 5.453 6.194 5.660 6.424 5.842 16% 18% 0.862 0.847 1.605 1.566 2.246 2.174 2.798 2.690 3.274 3.127 3.685 3.498 4.039 3.812 4.344 4.078 4.607 4.303 4.833 4.494 5.029 4.656 5.197 4.793 5.3424.910 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 7.020 8.566 9.471 10.368 11.255 12.134 4.327 4.439 4.533 13.004 | 12.106 11.296 10.563 | 9.399 | 9295 3.244 7.367 | 6.626 13.565 | 12.849 | 11.938 | 1116 | 10.380 | 972 3.5659 7.606 | 6.311 18.046 | 16.351| 14.377| 13.590 | 12.462 | 11.470 | 9515 | 3.514 | 7469 22.023 | 19.523 | 17.413 | 15.622 | 14.094 | 12783 | 10.675| 9.077 | 1543 25.808 | 22.396 | 19.600 | 17292 | 15.372 | 13.765 | 11.253 | 9427 | 3.055 32.835 | 27.355 | 23.115 | 19793 | 17.159 | 15.046 | 11.925 | 9779 | 3.244 6.002 5.463 15.006 4.611 6.142 5575 5.092 4.675 6623 5929 | 4.870 6.373 6.097 | 5467 | 4.948 7.003 | 6.177 | 5.517 | 4.979 7.105 | 6233 | 5.545 | 4.997 Future Value of $1 Periods 8% 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 3% 1.030 1.061 1.093 1.126 1.159 1.194 1.230 1.267 1.305 1.344 4% 1.040 1.062 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1.276 1.340 6% 1.060 1.124 1.191 1.262 1.338 1.080 1.166 1.260 1.360 1.469 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.358 2.594 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 1.062 U OVOW 2.195 2.700 1.072 1.407 1.265 1.316 1.369 1.423 1.480 1.083 1.094 1.105 1.419 1.504 1.594 1.689 1.791 1.477 1.551 1.629 3.185 3.759 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 1.974 2211 2.476 2.773 3.106 3.479 3.896 4.363 2.502 2.853 3.252 3.707 2.436 2.826 3.278 3.803 4.411 2.986 3.583 4.300 5.160 6.192 4.435 5.234 1.116 1.127 1.138 1.243 1.268 1.294 1.384 1.426 1.469 1.539 1.601 1.665 1.710 1.796 1.886 1.898 2.012 2.133 2.853 3.138 3.452 4.226 4.818 5.492 5.117 5.936 6.886 6.176 7.288 8.599 7.430 8.916 10.699 1.149 1.161 3797 1.319 1.346 1.732 1.801 2261 2.397 2937 3.172 6.261 7.138 7.988 9.266 10.147 11.974 12.839 15.407 4.17 1.220 1.282 1.348 1.489 1.486 1.641 1.311 2.208 1.513 1.58 1.806 2.094 2.427 3.262 2.191 2.666 3243 4.801 1.980 2.079 2.653 3.386 4.322 7040 3.207 4.292 5.743 10.256 4.661 6.348 10.063 21.725 6.727 10.335 7.49 45259 4.387 5474 9.646 17.000 29.960 193.051 13.743 26.462 50.950 188.884 19.461 40.874 85.850 | 378.721 27.333 62.669 143.371 750.378 38.338 95.396 237.376 | 1.48.72 Future Value of Annuity of $1 Periods 3% 8% 5% 1.000 2.050 1.000 2.030 3.091 4.184 5.309 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.462 4% 1.000 2.040 3.122 4.246 5.416 6% 1.000 2.060 3.184 4.375 5.637 3.153 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 16% 1.000 2.160 3.506 5.066 6.877 18% 1.000 2.180 3.572 5.215 7.154 20% 1.000 2.200 3.640 5.368 7.442 OVO OWN- 2% 1.000 2.020 3.060 4.122 5.204 6.308 7.434 8.583 9.755 10.950 12.169 13.412 14.680 6.468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 4.310 5.526 6.802 8.142 9.549 11.027 12.578 14.207 15.917 17.713 6.975 8.394 9.897 11.491 13.181 1.000 2.080 3.246 4.506 5.867 7.336 8.923 10.637 12.488 14.487 16.645 18.977 21.495 7.716 9.487 11.436 13.579 15.937 18.531 21.384 24.523 8.115 10.089 12.300 14.776 17.549 14% 1.000 2.140 3.440 4.921 6.610 8.536 10.730 13.233 16.085 19.337 23.045 27.271 32.089 8.977 11.414 14.240 17.519 21.321 25.733 30.850 36.786 9.442 12.142 15.327 19.086 23.521 9.930 12.916 16.499 20.799 25.959 11.567 12.683 13.809 12.808 14.192 15.618 13.486 15.026 14.972 16.870 18.882 20.655 24.133 28.029 28.755 34.931 42.219 32.150 39.581 48.497 16.627 15.974 17.293 24.215 27.152 14.947 16.097 22.019 28.243 34.785 48.886 17.086 18.599 26.870 36.459 47.575 75.401 24.297 32.030 40.568 60.402 18.292 19.599 21.015 20.024 21.579 23.276 29.778 33.066 6.786 47.727 54.865 56.085 66.39 79.058 195.026 | 120.800 | 164.762 41.646 27.975 32.333 37.531 43.672 50.818 59.196 31.72 37.280 43.842 51.660 60.965 72.035 57.275 72.052 191.025 115.380 146.625 186.688 98.347 13.334 | 181.871 249.214 342.603 471.981 14.494 | 241.333 1356.787 1530.312 1790.948 11.181 882 42.593 | 767.091 |1,342.025 | 2,360.757 14.163.213 | 7,343.858 45.762 73.106 113.263 259.057 Beckett Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections for the first five months of the upcoming year show the estimated unit sales of the planters each month to be as follows: (Click the icon to view additional information.) Inventory at the start of the year was 350 planters. The desired inventory of planters at the end of each month should be equal to 10% of the following month's budgeted sales. Each planter requires two pounds of polypropylene (a type of plastic). The company wants to have 20% of the polypropylene required for next month's production on hand at the end of each month. The polypropylene costs $0.25 per pound. Read the requirements. i Data Table Requirement 1. Prepare a production budget for each month in the first quarter of the year, including production in units for each month and for the quarter. Beckett Manufacturing Production Budget For the Months of January through March January February January March Quarter Unit sales Number of planters to be sold 3,500 3,400 3,600 4,000 4,200 February ... March ..... April ... May ... Plus: Desired ending inventory Total needed Enter any number in the edit fields and then continue to the next question. Print Print Done Done Less: Beginning inventory Units to produce Requirement 2. Prepare a direct materials budget for the polypropylene for each month in the first quarter of the year, including the pounds of polypropylene required and the total cost of the polypropylene to be purchased. Start by preparing the direct materials budget through the total quantity needed, then complete the budget. Beckett Manufacturing Direct Materials Budget For the Months of January through March January February March Quarter Units to be produced Multiply by: Quantity of direct materials needed per unit Quantity needed for production Plus: Desired ending inventory of direct materials Total quantity needed Less: Beginning inventory of direct materials Quantity to purchase Multiply by: Cost per pound Total cost of direct material purchases