Chapter 26 ENT 401 Homework- Using Valuation Methods to Make an Investment Decision. Case Information: ABC Manufacturing has set a hurdle rate of 15% for any new investment opportunities. ABC is analyzing three investment opportunities. Analyze the investment opportunity and answer questions a-e below Option A is the investment of $450,000 in a new machine that will result in cash flow stream of $30,000; $75,000, $82,000; 345,000; and $395,000 in years I through 5 respectively (The year five cash flow includes the proceeds from the sale of the machine). Option B is the investment of S27,500 in an annuity that will provide cash flows of $10,000 per year for five years Option C is the investment of's 500,000 in a new product line that will provide profits of $150,000 in year 1;$145,000 in year 2; $175,000 in year 3; $225,000 in year 4; and $125,000 in year 5. Complete the chart below using the information from the case. Calculate the Present Value (PV) and Net Present Value (NPV) for each of the options Include the formulas and show your work for each of the options to make an investment decision. (Only put the answers in the table below.) Calculate the IRR for each of the options using the Excel spreadsheet and insert the information in the IRR chart template. Option A Option B Option C Investment hurdle rate % % % Year 1 cash flow stream $ Year 2 cash flow streams Year 3 cash flow stream $ S Year 4 cash flow streams $ Year 5 cash flow stream $ $ I $ $ $ S $ $ $ $ $ Present Value Minus Inici Investment Net Present Value $ $ $ $ S $ Interest Rate of Return Formula 0 Y: 2 3 TRR Calculation (Complete in the Excel til, attach the file to show your work in Blackboard and complete the table below) ($) ($) ($) $ $ $ $ $ $ $ $ $ $ $ $ $ $ * % Yc5 IRR b. Which options should ABC not consider? Why? Answer: Which option do you recommend? Why? Answer: PV and NPV calculations: Show your work below. (This will allow me to give partial credit) Scenario 1: Scenario 2: Scenario 3