Clean Chips is a manufacturer of prototype chips based in Buffalo, New York. (Click the icon to view the prototype chips information.) B (Click the icon to view information on the options.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements Requirements 1 and 2. Calculate the after-tax cash inflows and outflows of the "modernize" and "replace' alternatives over the 2021-2027 period and calculate the net present value for each alternative. Let's begin with the modernize" alternative. Start by computing the present value of the after-tax cash flows from operations, then calculate the present value of the after-tax cash savings from depreciation and the terminal disposal value, and finally, determine the total net present value (NPV) of the investment for the 'modernize' alternative. (Round intermediary calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative present value of net cash flows.) Present Value Net Cash Inflow PY factor of Cash Flows Net initial investment After-tax cash flows from operations: Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Dec 31, 2025 Dec 31, 2026 x = Dec 31, 2027 Enter any number in the edit fields and then click Cherk Answer X ta More Info si Next year, in 2021, Clean Chips expects to deliver 562 prototype chips at an average price of $100,000. Clean Chips' marketing vice president forecasts growth of 75 prototype chips per year through 2027. That is, demand will be 562 in 2021, 637 in 2022, 712 in 2023, and so on. The plant cannot produce more than 537 prototype chips annually. To meet future demand, Clean Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $4,500,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the modernized plant. The old equipment is retained as part of the "modernize" alternative. Print Done i X Data Table The following data on the two options are available: Modernize Replace Initial investment in 2021 $ 35,000,000 $ 64,900,000 Terminal disposal value in 2027 $ 6,800,000 $ 14,800,000 Useful life 7 years 7 years Total annual cash operating cost per prototype chip $ 84,000 $ 76,000 Clean Chips uses straight-line depreciation, assuming zero terminal disposal value. For simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of 2021, and all transactions thereafter occur on the last day of the year. Clean Chips' required rate of return is 16%. There is no difference between the "modernize" and "replace" alternatives in terms of required working capital. Clean Chips pays a 45% tax rate on all income. Proceeds from sales of equipment above book value are taxed at the same 45% rate. Print Done Reference - Present Value of $1 Periods 2% 4% Period 1 0.980 0.962 Period 20.961 0.925 Period 3 0.942 0.889 Period 4 0.924 0.855 Period 5 0.906 0.822 Period 6 0.888 0.790 Period 7 0.871 0.760 Period 8 0.853 0.731 Period 9 0.837 0.703 Period 10 0.820 0.676 Period 11 0.804 0.650 Period 12 0.788 0.625 Period 13 0.773 0.601 Period 14 0.758 0.577 Period 15 0.743 0.555 Period 16 0.728 0.534 Period 17 0.714 0.513 Period 18 0.700 0.494 Period 19 0.686 0.475 Period 20 0.673 0.456 Period 21 0.660 0.439 Period 22 0.647 0.422 Period 23 0.634 0.406 Period 24 0.622 0.390 Period 25 0.610 0.375 Period 26 0.598 0.361 Period 27 0.586 0.347 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.294 0.278 0.262 0.247 0.233 0.220 0.207 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 0.199 0.184 0.170 0.158 0.146 0.135 0.125 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.135 0.123 0.112 0.102 0.092 0.084 0.076 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.093 0.083 0.074 0.066 0.059 0.053 0.047 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.064 0.056 0.049 0.043 0.038 0.033 0.029 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.044 0.038 0.033 0.028 0.024 0.021 0.018 18% 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.011 20% 22% 0.833 0.820 0.694 0.672 0.579 0.551 0.482 0.451 0.402 0.370 0.335 0.303 0.279 0.249 0.233 0.204 0.194 0.167 0.162 0.137 0.135 0.112 0.112 0.092 0.093 0.075 0.078 0.062 0.065 0.051 0.054 0.042 0.045 0.034 0.038 0.028 0.031 0.023 0.026 0.019 0.022 0.015 0.018 0.013 0.015 0.010 0.013 0.008 0.010 0.007 0.009 0.006 0.007 0.005 24% 0.806 0.650 0.524 0.423 0.341 0.275 0.222 0.179 0.144 0.116 0.094 0.076 0.061 0.049 0.040 0.032 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 26% 0.794 0.630 0.500 0.397 0.315 0.250 0.198 0.157 0.125 0.099 0.079 0.062 0.050 0.039 0.031 0.025 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 28% 0.781 0.610 0.477 0.373 0.291 0.227 0.178 0.139 0.108 0.085 0.066 0.052 0.040 0.032 0.025 0.019 0.015 0.012 0.009 0.007 0.006 0.004 0.003 0.003 0.002 0.002 0.001 30% 0.769 0.592 0.455 0.350 0.269 0.207 0.159 0.123 0.094 0.073 0.056 0.043 0.033 0.025 0.020 0.015 0.012 0.009 0.007 0.005 0.004 0.003 0.002 0.002 0.001 0.001 0.001 32% 0.758 0.574 0.435 0.329 0.250 0.189 0.143 0.108 0.082 0.062 0.047 0.036 0.027 0.021 0.016 0.012 0.009 0.007 0.005 0.004 0.003 0.002 0.002 0.001 0.001 0.001 0.001 40% Periods 0.714 Period 1 0.510 Period 2 0.364 Period 3 0.260 Period 4 0.186 Period 5 0.133 Period 6 0.095 Period 7 0.068 Period 8 0.048 Period 9 0.035 Period 10 0.025 Period 11 0.018 Period 12 0.013 Period 13 0.009 Period 14 0.006 Period 15 0.005 Period 16 0.003 Period 17 0.002 Period 18 0.002 Period 19 0.001 Period 20 0.001 Period 21 0.001 Period 22 0.000 Period 23 0.000 Period 24 0.000 Period 25 0.000 Period 26 0.000 Period 27 Print Done X Reference Present Value of Annuity of $1.00 in Arrears* Periods 2% 4% 6% 8% 10% 12% Period 1 0.980 0.962 0.943 0.926 0.909 0.893 Period 2 1.942 1.886 1.833 1.783 1.736 1.690 Period 3 2.884 2.775 2.673 2.577 2.487 2.402 Period 4 3.808 3.630 3.465 3.312 3.170 3,037 Period 5 4.713 4.452 4.212 3.993 3.791 3.605 Period 6 5.601 5.242 4.917 4.623 4.355 4.111 Period 7 6.472 6.002 5.582 5.206 4.868 4.564 Period 8 7.325 6.733 6.210 5.747 5.335 4.968 Period 9 8.162 7.435 6.802 6.247 5.759 5.328 Period 10 8.983 8.111 7.360 6.710 6.145 5.650 Period 11 9.787 8.760 7.887 7.139 6.495 5.938 Period 12 10.575 9.385 8.384 7.536 6.814 6.194 Period 13 11.348 9.986 8.853 7.904 7.103 6.424 Period 14 12.106 10.563 9.295 8.244 7.367 6.628 Period 15 12.849 11.118 9.712 8.559 7.606 6.811 Period 16 13.578 11.652 10.106 8.851 7.824 6.974 Period 17 14.292 12.166 12.166 10.477 9.122 8.022 7.120 Period 18 14.992 12.659 10.828 9.372 8.201 7.250 Period 19 15,678 13.134 11.158 9.604 8.365 7.366 Period 20 16.351 13.590 11.470 9.818 8.514 7.469 Period 21 17.011 14.029 11.764 10.017 8.649 7.562 Period 22 17.658 14.451 12.042 10.201 8.772 7.645 Period 23 18.292 14.857 12.303 10.371 8.883 7.718 Period 24 18.914 15.247 15.247 12.550 10.529 8.985 7.784 Period 25 19.523 15.622 12.783 10.675 9.077 7.843 Period 26 20.121 15.983 13.003 10.810 9.161 7.896 Period 27 20.707 16.330 13.211 10.935 9.237 7.943 14% 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 4.946 5.216 5.453 5.660 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.687 6.743 6.792 6.835 6.873 6.906 6.935 16% 0.862 1.605 2.246 2.798 3.274 3.685 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 5.575 5.668 5.749 5.818 5.877 5.929 5.973 18% 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5.008 5.092 5.162 5.222 5.273 5.316 5.353 5.384 5.410 5.432 5.451 5.467 5.480 5.492 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.843 4.870 4.891 4.909 4.925 4.937 4.948 4.956 4.964 22% 0.820 1.492 2.042 2.494 2.864 3.167 3.416 3.619 3.786 3.923 4.035 4.127 4.203 4.265 4.315 4.357 4.391 4.419 4.442 4.460 4.476 4.488 4.499 4.507 4.514 4.520 4.524 24% 26% 28% 0.806 0.794 0.781 1.457 1.424 1.392 1.981 1.923 1.868 2.404 2.320 2.241 2.745 2.635 2.532 3.020 2.885 2.759 3.242 3.083 2.937 3.421 3.241 3.076 3.566 3.366 3.184 3.682 3.465 3.269 3.776 3.543 3.335 3.851 3.606 3.387 3.912 3.656 3.427 3.962 3.695 3.459 4.001 3.726 3.483 4.033 3.751 3.503 4.059 3.771 3.518 4.080 3.786 3.529 4,097 3.799 3.539 4.110 3.808 3.546 4.121 3.816 3.551 4.130 3.822 3.556 4.137 3.827 3.559 4.143 3.831 3.562 4.147 3.834 3.564 4.151 3.837 3.566 4.154 3.839 3.567 30% 0.769 1.361 1.816 2.166 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.283 3.295 3.304 3.311 3.316 3.320 3.323 3.325 3.327 3.329 3.330 3.331 32% 0.758 1.331 1.766 2.096 2.345 2.534 2.677 2.786 2.868 2.930 2.978 3.013 3.040 3,061 3.076 3.088 3.097 3.104 3.109 3.113 3.116 3.118 3.120 3.121 3.122 3.123 3.123 40% Periods 0.714 Period 1 1.224 Period 2 1.589 Period 3 1.849 Period 4 2.035 Period 5 2.168 Period 6 2.263 Period 7 2.331 Period 8 2.379 Period 9 2.414 Period 10 2.438 Period 11 2.456 Period 12 2.469 Period 13 2.478 Period 14 2.484 Period 15 2.489 Period 16 2.492 Period 17 2.494 Period 18 2.496 Period 19 2.497 Period 20 2.498 Period 21 2.498 Period 22 2.499 Period 23 2.499 Period 24 2.499 Period 25 2.500 Period 26 2.500 Period 27 6.011 6.044 6.073 6.097 6.118 6.136 Print Done i Reference X Compound Amount of $1.00 (The Future Value of $1.00) Periods 2% 4% 6% 8% 10% 12% 14% 16% Period 1 1.020 1.040 1.060 1.080 1.100 1.120 1.140 1.160 Period 2 1.040 1.082 1.124 1.166 1.210 1.254 1.300 1.346 Period 3 1.081 1.125 1.191 1.260 1.331 1.405 1.482 1.561 Period 4 1.082 1.170 1.262 1.360 1.464 1.574 1.689 1.811 Period 5 1.104 1.217 1.338 1.469 1.611 1.762 1.925 2.100 Period 6 1.126 1.265 1.419 1.587 1.772 1.974 2.195 2.436 Perlod 7 1.149 1.316 1.504 1.714 1.949 2.211 2.502 2.826 Period 8 1.172 1.369 1.594 1.851 2.144 2.476 2.853 3.278 Period 9 1.195 1.423 1.689 1.999 2.358 2.773 3.252 3.803 Period 10 1.219 1.480 1.791 2.159 2.594 3.106 3.707 4.411 Period 11 1.243 1.539 1.898 2.332 2.853 3.479 4.226 5.117 Period 12 1.268 1.601 2.012 2.518 3.138 3.896 4.818 5.936 Period 13 1.294 1.665 2.133 2.720 3.452 4.363 5.492 8.886 Period 14 1.319 1.732 2.261 2.937 3.797 4.887 6.261 7.988 Period 15 1.346 1.801 2.397 3.172 4.177 5.474 7.138 9.266 Period 16 1.373 1.873 2.540 3.426 4.595 6.130 8.137 10.748 Period 17 1.400 1.948 2.693 3.700 5.054 6.866 9.276 12.468 Period 18 1.428 2.026 2.854 3.996 5.560 7.690 10.575 14.463 Period 19 1.457 2.107 3.026 4.316 6.116 8.613 12.056 16.777 Period 20 1.486 2.191 3.207 4.661 6.727 9.646 13.743 19.461 Period 21 1.516 2.279 3.400 5.034 7.400 10.804 15.668 22.574 Period 22 1.546 2.370 3.604 5.437 8.140 12.100 17.861 26.186 Period 23 1.577 2.465 3.820 5.871 8.954 13.552 20.362 30.376 Period 24 1.608 2.563 4.049 8.341 9.850 15.179 23.212 35.236 Period 25 1.641 2.666 4.292 6.848 10.835 17.000 26.462 40.874 Period 26 1.673 2.772 4.549 7.396 11.918 19.040 19.040 30.167 47.414 Period 27 1.707 2.883 4.822 7.988 13.110 21.325 34.390 55.000 18% 1.180 1.392 1.643 1.939 2.288 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 14.129 16.672 19.673 23.214 27.393 32.324 38.142 45.008 53.109 62.669 73.949 87.260 20% 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12.839 15.407 18.488 22.186 26.623 31.948 38.338 46.005 55.206 66.247 79.497 95.396 114.475 137.371 22% 1.220 1.48.8 1.816 2.215 2.703 3.297 4.023 4.908 5.987 7.305 8.912 10.872 13.284 16.182 19.742 24.086 29.384 35.849 43.736 53.358 65.096 79.418 96.889 118.205 144.210 175.936 214.642 24% 1.240 1.538 1.907 2.364 2.932 3.635 4.508 5.590 6.931 8.594 10.657 13.215 16.386 20.319 25.196 31.243 38.741 48.039 59.568 73.864 91.592 113.574 140.831 174.631 216.542 268.512 332.955 26% 1.260 1.58.8 2.000 2.520 3.176 4.002 5.042 6.353 8.005 10.086 12.708 16.012 20.175 25.421 32.030 40.358 50.851 64.072 80.731 101.721 128.169 161.492 203.480 256.385 323.045 407.037 512.867 28% 1.280 1.638 2.097 2.884 3.436 4.398 5.629 7.206 9.223 11.806 15.112 19.343 24.759 31.691 40.565 51.923 66.461 85.071 108.890 139.380 178.406 228.360 292.300 374.144 478.905 612.998 784.638 30% 1.300 1.690 2.197 2.856 3.713 4.827 6.275 8.157 10.604 13.786 17.922 23.298 30.288 39.374 51.186 66.542 86.504 112.455 146.192 190.050 247.065 321.184 417,539 542.801 705.641 917.333 1192.533 32% 1.320 1.742 2.300 3.036 4.007 5.290 6.983 9.217 12.166 16.060 21.199 27.983 38.937 48.757 64.359 84.954 112.139 148.024 195.391 257.916 340.449 449.393 593.199 783.023 1033.590 1364.339 1800.927 40% Periods 1.400 Period 1 1.960 Period 2 2.744 Period 3 3.842 Period 4 5.378 Period 5 7.530 Period 6 10.541 Period 7 14.758 Period 8 20.661 Period 9 28.925 Period 10 40.496 Period 11 58.694 Period 12 79.371 Period 13 111.120 Period 14 155.568 Period 15 217.795 Period 16 304.913 Period 17 426.879 Period 18 597.630 Period 19 836.683 Period 20 1171.356 Period 21 1639.898 Period 22 2295.857 Period 23 3214.200 Period 24 4499.880 Period 25 6299.831 Period 26 8819.764 Period 27 Print Done Reference Compound Amount of Annuity of $1.00 in Arrears (Future Value of Annuity) Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.020 2.040 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 Period 3 3.060 3.122 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Period 4 4.122 4.246 4.375 4.506 4.641 4.779 4.921 5.066 5.215 5.368 Period 5 5.204 5.416 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 Period 6 6.308 6.633 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 Period 7 7.434 7.898 7.434 7.898 8.394 8.923 9.487 10.089 10.730 11.414 12.142 12.916 Period 8 8.583 9.214 9.897 10.637 11.436 12.300 13.233 14.240 15.327 16.499 Period 9 9.755 10.583 11.491 12.488 13.579 14.778 16.085 17.519 19.086 20.799 Period 10 10.950 12.006 13.181 14.487 15.937 17.549 19.337 21.321 23.521 23.521 25.959 Period 11 12.169 13.486 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 Period 12 13.412 15.026 16.870 18.977 21.384 24.133 27.271 30.850 34.931 39.581 Period 13 14.680 16.627 18.882 21.495 24.523 28.029 32.089 36.786 42.219 48.497 Period 14 15.974 18.292 21.015 24.215 27.975 32.393 37.581 43.672 43.672 50.818 59.196 Period 15 17.293 20.024 23.276 27.152 31.772 37.280 43.842 51.660 60.965 60.965 72.035 Period 16 18.639 21.825 25.673 30.324 35.950 42.753 50.980 60.925 72.939 87.442 Period 17 20.012 23.698 28.213 33.750 40.545 48.884 59.118 71.673 87,068 105.931 Period 18 21.412 25.645 30.906 37.450 45.599 55.750 68.394 84.141 103.740 128.117 Period 19 22.841 27.671 33.760 41.446 51.159 63.440 78.969 98.603 123.414 154.740 Period 20 24.297 29.778 36.786 45.782 57.275 72.052 91.025 115.380 148.628 186.688 Period 21 25.783 31.969 39.993 50.423 64.002 81.699 104.768 134.841 174.021 225.026 Period 22 27 299 34.248 43.392 55.457 71.403 92.503 120.436 157.415 206.345 271.031 Period 23 28.845 36.618 46.996 60.893 79.543 104.603 138.297 183.601 244.487 326.237 Period 24 30.422 39.083 50.816 66.765 88.497 118.155 158.659 213.978 289.494 392.484 Period 25 32.030 41.646 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 Period 26 33.671 44.312 59.156 79.954 109.182 150.334 208.333 290.088 405.272 567.377 Period 27 35.344 47.084 63.706 87.351 121.100 169.374 238.499 337.502 479.221 681.853 22% 1.000 2.220 3.708 5.524 7.740 10.442 13.740 17.762 22.670 28.657 35.962 44.874 55.746 69.010 85.192 104.935 129.020 158.405 194.254 237.989 291.347 356.443 435.861 532.750 650.955 795. 165 971.102 24% 1.000 2.240 3.778 5.684 8.048 10.980 14.615 19.123 24.712 31.643 40.238 50.895 64.110 80.496 100.815 126.011 157.253 195.994 244.033 303.601 377.465 469.056 582.630 723.461 898.092 1114.634 1383.146 26% 1.000 2.260 3.848 5.848 8.368 11.544 15.546 20.588 28.940 34.945 45.031 57.739 73.751 93.926 119.347 151.377 191.735 242.585 306.658 387.389 489.110 617 278 778.771 982 251 1238.636 1561.682 1988.719 28% 1.000 2.280 3.918 6.016 8.700 12.136 16.534 22.163 29.369 38.593 50.398 65.510 84.853 109.612 141,303 181.868 233.791 300.252 385.323 494.213 633.593 811.999 1040.358 1332.659 1706.803 2185.708 2798.708 30% 1.000 2.300 3.990 6.187 9.043 12.756 17.583 23.858 32.015 42.619 56.405 74.327 97.625 127.913 167.286 218.472 285.014 371.518 483.973 830.165 820.215 1067.280 1388.464 1806.003 2348.803 3054.444 3971.778 32% 1.000 2.320 4.062 6.362 9.398 13.406 18.896 25.678 34.995 47.062 63.122 84.320 112.303 149.240 197.997 262.356 347.309 459.449 607.472 802.863 1060.779 1401.229 1850.622 2443.821 3226.844 4260.434 5824.772 40% Periods 1.000 Period 1 2.400 Period 2 4.360 Period 3 7.104 Period 4 10.946 Period 5 16.324 Period 6 23.853 Period 7 34.395 Period 8 49.153 Period 9 69.814 Period 10 98.739 Period 11 139.235 Period 12 195.929 Period 13 275.300 Period 14 386.420 Period 15 541.988 Period 16 759.784 Period 17 1064.697 Period 18 1491.576 Period 19 2089.206 Period 20 2925.889 Period 21 4097.245 Period 22 5737.142 Period 23 8032.999 Period 24 11247.199 Period 25 15747.079 Period 26 22046.910 Period 27 Print Done i X Requirements 1. 2. 3. Calculate the after-tax cash inflows and outflows of the "modernize" and "replace" alternatives over the 2021 - 2027 period. Calculate the net present value of the "modernize" and "replace" alternatives. Suppose Clean Chips is planning to build several more plants. It wants to have the most advantageous tax position possible. Clean Chips has been approached by Spain, Malaysia, and Australia to construct plants in their countries. Briefly describe in qualitative terms the income tax features that would be advantageous to Clean Chips. Print Done