3 Eon Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $925,000. Projected net cash inflows are as follows: (Click the icon to view the projected net cash inflows) (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of S1 table) Read the requirements Requirement 1. Computo this project's NPV using Eon's 16% hurdla rate. Should Eon invest in the equipment? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, XXXX Use parentheses or a minus sign for a negative net present value.) Net Cash PV Factor ( Years Inflow -16%) Present Value Year 1 Present value of each year's Inflow: (n = 1) $ 265,000 0.862 $ 228.430 Year 2 Present value of each year's Inflow: (n=2) 250,000 0.743 185,750 Year 3 Present value of each year's Inflow: (n = 3) 224,000 0.641 143,584 214,000 0.552 Year 4 Present value of each year's inflow: (n = 4) 118,128 Year 5 Present value of each year's inflow: (n = 5) 203.000 0.476 96,628 174,000 Year 6 Present value of each year's inflow: (n = 6) 0.410 71,340 Total PV of cash inflows Year o Initial investment Net present value of the project x Data table Year 1 $ 265,000 Year 2 250,000 Year 3 224,000 Year 4 214,000 Year 5 203,000 Year 6 174,000 9 Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 0.910 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0,826 0.797 0.769 0.756 0.743 0.7180.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.7940.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.519 0497 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.6660.630 0.596 0.564 0.507 0.456 0432 04100370 0.335 Period 7 0.933 0.871 0.813 0.760 0.7110.665 0.623 0.5830.547 0.513 0.452 0.400 0.376 0.354 0.3140.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.4040.351 0.327 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 Period 10 0.905 0.820 0.7440.676 0.614 0.558 0.5080463 0.422 0.386 0.3220270 0247 0.227 0.1910.162 Period 11 0.896 0.8040.722 0.650 0.585 0.52704750429 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 Period 12 0.887 0.788 0.70 0.625 0.557 0497 0.444 0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0.4690415 0.368 0.326 0.290 0.229 0.1820.163 0.145 0.116 0.093 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.205 0.160 0.141 0.125 0.099 0.078 Period 15 0.861 0.743 0,642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Period 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 Period 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.146 0.108 0.093 0.080 0.060 0.045 Period 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 Period 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.1940.164 0.116 0.0830.070 0.060 0.043 0.031 Period 20 0.820 0.673 0.5540456 0.377 0.3120.2580215 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.026 Period 21 0.811 0.660 0.538 0.439 0.359 0.294 0.24 0.199 0.1640.135 0.093 0.064 0.053 0.044 0.031 0.022 sig Present Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1808 1.783 1.759 1.736 1.6901.647 1.626 1.605 1.566 1.528 Period 3 2.9412.884 2829 2.775 2.723 2673 2.624 2.577 2.531 2487 2402 2.322 2.283 2246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.855 2.798 2.690 2.589 Period 5 4.8534.713 4.580 4.452 43294212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5,033 4868 4.564 4.288 4.160 40393.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 62105.971 5.747 5.535 5.335 4.968 4.639 4487 4 344 4.078 3.837 Period 9 8.566 8.1627.786 7.435 7.108 6.802 6.515 6247 5.995 5.759 5328 4.946 4.772 4.607 4.303 4.031 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5216 5.019 4833 4494 4.192 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4327 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 5.197 4793 4439 Period 13 12.134 11.348 10.635 9.996 9,394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5,583 5.342 4.910 4533 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7367 6.628 6.002 5.724 5.468 5.008 4611 Period 15 13.865 12849 11.938 11.118 10,380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5575 5.092 4.675 Period 16 14.718 13.578 12.561 11.652 10.838 10.106 9447 8.851 8.313 7.824 6.9746.265 5954 5,669 5.1624.730 Period 17 15562 14.292 13.166 12.166 11.274 10.4771 9.763 9.122 8,544 8.022 7.120 6.373 6.047 5,749 5222 4.775 Period 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8201 7.250 6.467 6.128 5818 5273 4.812 Period 19 17.226 15.678 14324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.356 6.550 6.198 5.877 5.316 4.844 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.469 6.623 6.259 5.929 5.3534870 Period 21 18.857 17.011 15.415 14.029 12 821 11.764 10.836 10.017 9.292 8.6497.562 6.687 6.3125.9735,384 4891 ar hr 1. Compute this project's NPV using Eon's 16% hurdle rate. Should Eon invest in the equipment? 2. Eon could refurbish the equipment at the end of six years for $103,000. The refurbished equipment could be used one more year, providing $72,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $53,000 residual value at the end of year 7. Should Eon invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.)