Alton Manufacturing, Inc. has a manufacturing machine that needs attention (Click the icon to view additional information.) Alton expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Alton uses straight-line depreciation and requires an annual return of 16%. (Click the icon to view Present Value (Click the icon to view Present Value (Click the icon to view Future Value o (Click the icon to view Future Value Read the requirements Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish). Net Cash Outflows Amount Invested Net Cash Inflows Annual Accumulated Year 0 $ 600,000 1 2 3 4 5 Choose from any list or enter any number in the input fields and then continue to the next question Alton Manufacturing, Inc. has a manufacturing machine that needs attention (Click the icon to view additional information) Alton expects the following net cash inflows from the two options: (Click the icon to view the net cash flows) Alton uses straight-line depreciation and requires an annual return of 16%. (Click the icon to view Present Value of $it (Click the icon to view Present Value of Orc (Click the icon to view Future Value of $1 ta (Click the icon to view Future Value of Ordin Read the requirements 6 7 8 (Round your answer to one decimal place) years The payback for Option 1 (refurbish current machine) is Now complete the payback schedule for Option 2 (purchase) Net Cash Outflows Year Net Cash Inflows Annual Accumulated Amount Invested 0 $ 1,700,000 Choose from any list or enter any number in the input fields and then continue to the next question. g Alton Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Alton expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Alton uses straight-line depreciation and requires an annual return of 16% (Click the icon to view Present Value (Click the icon to view Present Value (Click the icon to view Future Value (Click the icon to view Future Value Read the requirements. 0 $ 1,700,000 1 2 3 4 5 6 7 8 9 10 Round nur answer to no decimal nlare) Choose from any list or enter any number in the input fields and then continue to the next question Click the icon to view Future Value of Ordinary Annuity of $1 table) ements. Data Tables X More Info - X Requirements -X Year Refurbish Current Purchase New Machine The company is considering two options. Option 1 is to refurbish the current machine at a cost of $600,000 If refurbished, Alton expects the machine to Last another eight years and then have no restrual value Option 2 is to replace the machine at a cost of $1.700.000. A new machine would last 10 years and have no residual value 1 1 $ B0.000 $ 250.000 Compute the payback, the ARR, the NPV and the profability index of these Which option should Ahon choose? Why? 2 2 3 200.000 Machine 850,000 400.000 350.000 300.000 250 000 250.000 Print 4 Done 150.000 100.000 Print Done 5 5 100.000 100.000 250.000 8 100.000 250.000 250.000 250.000 cause this option has a payback period, an ARR that is the other option 10 NPV, and its profitability index is Total 1.090.000 $ 3.400,000 en continue to the next question (Click the icon to view the net cash flows.) Alton uses straight-line depreciation and requires an annual retum of 16%. (Click the icon to vie (Click the icon to vie Read the requirements (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of retum) for each of the options. ARR Refurbish 96 Purchase 96 Compute the NPV for each of the options. Begin with Option 1 (refurbish). (Enter the factors to three decimal places. X.XXX. Use parentheses or a minus sign for a negative net pires Net Cash Present Years PV Factor (i = 16%) Inflow Value Present value of each year's inflow: (n = 1) (n=2) (n = 3) 2 3 Choose from any list or enter any number in the input fields and then continue to the next question O Alton uses straight-line depreciation and requires an annual retum of 16% (Click the icon Read the requirements WWW wy VOLIURE 2 3 4 Present value of each year's inflow: (n = 1) (n=2) (n = 3) (n = 4) (n = 5) (n = 6) (n=7) (n = 8) 5 6 7 8 Total PV of cash inflows 0 Initial investment Net present value of the project Now compute the NPV for Option 2 (purchase). (Enter the factors to three decimal places. X.XXX. Use parentheses or a minus sign for a negative net present value.) Choose from any list or enter any number in the input fields and then continue to the next question (Click the icon to Read the requirements Net Cash PV Factor Present Years Inflow (i = 16%) Value 1 2 3 Present value of each year's inflow: (n = 1) (n = 2) (n = 3) (n = 4) (n = 5) (n=6) 4 5 6 7 8 (n = 3 9 LO (n = 10) Total PV of cash inflows Initial investment Choose from any list or enter any number in the input fields and then continue to the next question O abon and reques an annual rebum of 10% (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements 8 (n = 8) (n-9) 9 10 in = 10) Total PV of cash inflows 0 Initial investment Net present value of the project Finally, compute the profitability index for each option (Round to two decimal places XXX) - Profitability index Refurbish Purchase 1 Requirement 2. Which option should Ahon choose? Why? Review your answers in Requirement 1. Alton should choose because this option has a payback period, an ARR that is the other option, a NPV. and its profitability index is Choose from any list or enter any number in the input fields and then continue to the next