A draw bench is a machine used to cold work metal by changing it shape. In the manufacture of tubing, the draw bench pulls (or draws) tube "hollows" over a mandrel and through a die, thereby ensuring high dimensional integrity of both the inner and outer diameter of the tubes. It also provides smooth inner and outer surface finish, and strengthens the tube by cold working. A company is now considering three options. Option 1: Keep and continue using the existing draw bench purchased 10 years ago at a cost of $495,000 shipped, installed, and set up. It underwent extensive repairs 2 years ago for $220,000. It works fine, but is slow by today's standards and cannot process the smaller tubes that must be sold as hollows, thereby not realizing potential net revenues of $145,000 per year. In addition, it does not have the capacity to draw a few new and larger size tubes, making it necessary to sell those hollows without the value-added draw process and not realizing the potential increase of $105,000 in net annual revenues. The existing bench can be sold now for $175,000. It has 8 more years of life, after which it will have no remaining value. Option 2: Modify the existing draw bench with a newly designed and strengthened motor, mandrel, and tube handling device that will make the bench better than new, providing speed and capacity to process the smaller tubes now being sold as hollows and realizing the extra $145,000 per year. The modification cost will be $370,000 and operating costs during each of years 1-8 will be higher by $3,000 than for the existing bench. After 8 years, the modified draw bench can be sold for $320,000. Option 3: Purchase a new, fast, strong, larger and more efficient draw bench for $990,000 shipped, installed, and set up. It will have the capacity to draw all of the tubes, including both sets now sold as hollows. Further, it will have enough reserve capacity to add more tube draws, netting $85,000 extra in the first year and increasing $10,000 each year thereafter. Due to its size, yearly operational costs will be $35,000 more than for the existing bench. After 8 years, the new larger draw bench will be worth $415,000. Parta Based upon the PW criterion, which option should be taken if the discount rate is 10%? Use the cash flow (insider's viewpoint) approach. Click here to access the TVM Factor Table Calculator. PW Option 1 $ Option 2 $ Option 3 $ Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance for PW values under Option 2 and Option 3 is $10. Which option should be taken? should be taken. A draw bench is a machine used to cold work metal by changing it shape. In the manufacture of tubing, the draw bench pulls (or draws) tube "hollows" over a mandrel and through a die, thereby ensuring high dimensional integrity of both the inner and outer diameter of the tubes. It also provides smooth inner and outer surface finish, and strengthens the tube by cold working. A company is now considering three options. Option 1: Keep and continue using the existing draw bench purchased 10 years ago at a cost of $495,000 shipped, installed, and set up. It underwent extensive repairs 2 years ago for $220,000. It works fine, but is slow by today's standards and cannot process the smaller tubes that must be sold as hollows, thereby not realizing potential net revenues of $145,000 per year. In addition, it does not have the capacity to draw a few new and larger size tubes, making it necessary to sell those hollows without the value-added draw process and not realizing the potential increase of $105,000 in net annual revenues. The existing bench can be sold now for $175,000. It has 8 more years of life, after which it will have no remaining value. Option 2: Modify the existing draw bench with a newly designed and strengthened motor, mandrel, and tube handling device that will make the bench better than new, providing speed and capacity to process the smaller tubes now being sold as hollows and realizing the extra $145,000 per year. The modification cost will be $370,000 and operating costs during each of years 1-8 will be higher by $3,000 than for the existing bench. After 8 years, the modified draw bench can be sold for $320,000. Option 3: Purchase a new, fast, strong, larger and more efficient draw bench for $990,000 shipped, installed, and set up. It will have the capacity to draw all of the tubes, including both sets now sold as hollows. Further, it will have enough reserve capacity to add more tube draws, netting $85,000 extra in the first year and increasing $10,000 each year thereafter. Due to its size, yearly operational costs will be $35,000 more than for the existing bench. After 8 years, the new larger draw bench will be worth $415,000. Parta Based upon the PW criterion, which option should be taken if the discount rate is 10%? Use the cash flow (insider's viewpoint) approach. Click here to access the TVM Factor Table Calculator. PW Option 1 $ Option 2 $ Option 3 $ Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance for PW values under Option 2 and Option 3 is $10. Which option should be taken? should be taken