attention. CERERE Kilmer Manufacturing, Inc. has a manufacturing machine that needs (Click the icon to view Present Value of $1 table.) (Click the icon to view additional information.) (Click the icon to view Present Value of Ordinary Annuity of $1 table) Kilmer expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) (Click the icon to view Future Value of $1 table.) Kilmer uses straight-line depreciation and requires an annual return of 14% (Click the icon to view Future Value of Ordinary Annuity of $1 table.) 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 Inflows Year Amount Invested Annual Accumulated 2,600,000 Net Cash Outflows 0 $ 1 2 3 4 5 6 7 8 Submit quiz BE The payback for Option 1 (refurbish current machine) is years Now complete the payback schedule for Option 2 (purchase). Net Cash Outflows Net Cash Inflows Year Amount Invested Annual Accumulated 0 0 $ 3,800,000 1 2 3 4 4 ch 6 7 D Su Read the requirements CO 8 9 10 (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years, Compute the ARR (accounting rate of return) for each of the options. ARR % Refurbish Purchase % 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 am sign for a negative net present value) Net Cash PV Factor Present Now compute the NPV for Option 2 (purchase). (Enter the factors to three decimal places. XXXX Use parentheses or a minus sign for a negative net present value.) Net Cash py Factor Present Value Years Inflow (i -14%) 1 Present value of each year's inflow: (n = 1) (n=2) (n = 3) N 3 . . table.) BBBBB i (Chick the lor VIEW Kilmer expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Kilmer uses straight-line depreciation and requires an annual return of 14%. (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements. 1 2 3 4 4 5 6 (n = 1) (n=2) (n = 3) (n = 4) (n = 5) (n=6) (n=7) (n = 8) (n = 9) (n = 10) Total PV of cash inflows 7 8 8 9 10 0 Initial investment Net present value of the project Submit a 1 Net present value of the project Finally, computo the profitability index for each option (Round to two decimal plaon XXX.) Profitability index Refurbish Purchase Requirement 2. Which option should Kilmer choose? Why? Review your answers in Requirement 1. the Kilmer should choose because this option has a payback period, an ARR that is other option, a NPV, and its profitability index is table.) (Click the icon to view Future Value of $1 table.) view additional Orduur. Hlowing net cash inflows from the two options: view the net cash flows.) ined ydinary Annuity of $ More info cast tmer The company is considering two options. Option 1 is to refurbish the current machine at a cost of $2,600,000. If refurbished, Kilmer expects the machine to last another eight years and then have no residual value. Option 2 is to replace the machine at a cost of $3,800,000. A new machine would last 10 years and have no residual value. t valu profit hdex Print Done ich oport STOUT Ker Chooser wry? s in Requirement 1 39, Inc. has a manut X ent Valu Data table Sent Vall view additional in Ollowing net cash in view the net cash line depreciation al fe Value Refurbish Current Machine Year Purchase New Machine e Value Year 1 $ Year 2 Year 3 1,820,000 $ 560,000 420,000 280,000 140,000 cash inflows Year 4 1,260,000 820,000 680,000 540,000 400,000 400,000 400,000 400,000 stment Year 5 Year 6 mt value of the proje Year 7 140,000 140,000 140,000 profitability index fd Year 8 Year 9 Profitab 400,000 400,000 Year 10 $ 3,640,000 $ Total 5,700,000 ich option should s in Requirement 1 an ARR Print Done NPV, and its 1 x Reference Filme ten i Bilme Kim 10 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 0.9350.926 0,917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.9070.890 0.873 0.8570.8420.826 0.797 0.769 0.756 0.743 0.7180.694 Period 3 0.9710.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 Period 4 0961 0.9240888 0.855 0.8230.792 0.763 0.735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Perlod 5 0.951 0.906 0863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.519 0497 0.4780437 0.402 Period 6 0.942 0.868 0.837 0.790 0.746 0705 0.6660.630 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.750 0.7110.665 0.623 0583 0.547 0.513 04520.400 0.376 0.354 0.3140.279 Period 8 0923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.4040.3510.327 0.305 0.266 0.233 Period 9 0.914 0.8370.766 0.703 0.645 0.5920.544 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0225 0.194 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 11 0.896 0.804 0.722 0.650 0.585 0.5270475 0429 0.388 0.350 0287 0.2370215 0.195 0.162 0.135 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.257 0.208 0.187 0.1680.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0415 0.358 0.326 0290 0.229 0.182 0.163 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 0.0990078 Period 15 0.861 0.743 0.642 0.566 0.481 0.417 0.362 0.315 0.275 0239 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 0.3390.292 0.252 0218 0.163 0.123 0.107 0.093 0.071 0.054 Period 17 0.844 0.714 0.605 0513 0.438 0.371 0.317 0.270 0.231 0.1980.146 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 0212 0.18 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 0.083 0.070 0.060 0.043 0.031 Finalll Refu Pure Reqy Revid Kilme other Print Done