(Click the icon to view Present Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10%. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (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. 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 Net Cash Inflows Year Amount Invested Annual Accumulated 0 $ 2,000,000 1 2 3 4 5 6 7 8 (Round your answer to one decimal place.) The payback for Option 1 (refurbish current machine) is years. 3 Question Help o (Click the icon to view Present Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10%. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (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. 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 $ 3,600,000 1 2 3 4 5 6 7 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 a minus sign for a negative net present value.) Net Cash Present PV Factor (i = 10%) Years Inflow Value Present value of each year's inflow: 1 In 21 Choose from any list or enter any number in the input fields and then continue to the next question (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10% (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements. 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 present value.) PV Factor Net Cash Inflow Present Value (i = 10%) Years 1 2 3 Present value of each year's inflow (n = 1) (n=2) (n = 3) (n = 4) (n = 5) (n = 6) (n = 7) 4 5 6 7 8 (n = 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.) Net Cash Present PV Factor (i = 10%) Inflow Years Value 1 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 Choose from any list or enter any number in the input fields and then continue to the next question. (Click the icon to view Present Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: BE: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10%. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (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. 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.) Net Cash Present PV Factor (i = 10%) Years Inflow Value 1 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) (n=9) 5 6 7 8 9 10 (n = 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 X.XX.) = Profitability index Refurbish Purchase Requirement 2. Which option should Gilpin choose? Why? Review your answers in Requirement 1. Gilpin should choose payback period, because this option has a NPV, and its profitability index is an ARR that is the other option, a Choose from any list or enter any number in the input fields and then continue to the next question. i More Info -X The company is considering two options. Option 1 is to refurbish the current machine at a cost of $2,000,000. If refurbished, Gilpin 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 $3,600,000. A new machine would last 10 years and have no residual value. Print Done itial investment 1 Data Table Year Refurbish Current Purchase New Machine Machine 1 $ 980,000 $ 2,580,000 560,000 420,000 640,000 500,000 360,000 280,000 220,000 1 oo Voo A W N 140,000 140,000 220,000 220,000 140,000 140,000 220,000 220,000 10 220,000 $ 2,800,000 $ 5,400,000 Total Print Done Reference Present Value of $1 3% 0.971 0.943 Periods 1 2 3 4 5 1% 0.990 0.980 0.971 0.961 0.951 2% 0.980 0.961 0.942 0.924 0.906 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.864 0823 0.784 6% 7% 0.943 0.935 0.890 0.873 0.840 0.816 0.792 0.763 0.747 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 12% 0 893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 15% 0.870 0.756 0.658 0.572 0.497 0.915 0.888 0.863 0.596 0.547 6 7 8 9 10 0.942 0.933 0.923 0.914 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.666 0.665 0.623 0.627 0 582 0.592 0.544 0.558 0.508 0.630 0.583 0.540 0.500 0.463 0.502 0.564 0.507 0.513 0.452 0.467 0.404 0.424 0.361 0.386 0322 0.456 0.400 0.351 0.308 0.270 0.432 0.376 0.327 0.284 0.247 0.460 0.422 0.475 0.444 11 12 13 14 15 0.896 0.887 0.879 0.870 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0 650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0469 0.442 0.417 0.415 0.429 0.397 0.368 0.340 0.315 0.388 0.356 0.326 0 299 0.275 0.350 0.319 0.290 0.263 0.239 0.287 0.257 0.229 0205 0.183 0.237 0.208 0.182 0.160 0.140 0215 0.187 0.163 0.141 0.123 0.388 0.362 16 17 18 19 20 0.853 0.728 0.844 0.714 0.836 0.700 0.828 0.686 0.8200.673 0.623 0.605 0.587 0.570 0554 0.534 0.513 0.494 0475 0.456 0.458 0436 0.416 0.396 0.377 0.394 0.371 0.350 0.331 0.312 0.339 0 317 0.296 0.277 0.258 0.292 0.270 0.250 0.232 0.215 0.252 0.231 0.212 0.194 0.178 0.218 0.198 0.180 0.164 0.149 0.163 0.146 0.130 0.116 0.104 0.123 0.108 0.095 0.107 0.093 0.081 0.070 0.061 0.083 0.073 0.242 0.226 21 22 23 24 25 0.811 0.660 0.803 0.647 0.795 0634 0.7880.622 0.780 0.610 0.538 0.522 0.507 0.492 0.478 0.439 0.359 0.422 0.342 0.406 0.326 0.3900 310 0.375 0.295 0.294 0.278 0.262 0247 0233 0.211 0.197 0.184 0.199 0.184 0.170 0.158 0.146 0.164 0.150 0.138 0.126 0.116 0.135 0.093 0.123 0.083 0.112 0.074 0.102 0.066 0.092 0.059 0 064 0.056 0.049 0.043 0.038 0053 0.046 0.040 0.035 0.030 26 27 28 29 30 0.772 0.598 0.764 0.586 0.757 0.574 0.749 0.563 0.742 0.552 0464 0.450 0.437 0.424 0.412 0 361 0.347 0.333 0.321 0.308 0 281 0.268 0.255 0.243 0.231 0.220 0207 0.196 0.185 0.174 0.172 0.161 0.150 0.141 0.131 0.135 0.125 0.116 0.107 0.099 0.106 0.084 0.098 0.076 0 090 0.069 0.082 0.063 0.075 0.057 0.053 0.047 0.042 0.037 0.033 0.033 0.029 0.026 0.022 0.020 0.026 0.023 0.020 0.017 0.015 40 0.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.011 0.005 0.004 50 0.608 0.372 0.228 0.141 0.087 0.054 0.034 0.021 0.013 0.009 0.003 0.001 0.001 Print Done Fas , GIMT ITUCK IS X Reference Present Value of Ordinary Annuity of $1 vo Periods 1 2 3 4 5 1% 2% 0.990 0.980 1.970 1.942 2.941 2.884 3.902 3.808 4.8534.713 3% 0.971 1.913 2.829 3.717 4.580 4% 0.962 1.886 2.775 3.630 4.452 5% 0.952 1.859 2.723 3.546 4.329 6% 0.943 1.833 2.673 3.465 4212 7% 0.935 1.808 2.624 3.387 4.100 8% 0.926 1.783 2577 3.312 3.993 9% 0.917 1.759 2.531 3.240 3.890 10% 12% 0.909 0.893 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.605 14% 15% 0.8770870 1.647 1.626 2.322 2 283 2914 2.855 3.433 3.352 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 5.795 5.601 5417 5242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 6.728 6.472 6230 6.002 5.786 5.582 5.389 5.206 5033 4.868 4.564 4.288 4.160 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 8,566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 9.471 8.983 8.530 8.111 7.722 7.360 7024 6.710 6.418 6.145 5.650 5.216 5.019 10.368 9.787 9.253 8.760 8.3067.887 7499 7.139 6.805 6.495 5.938 5.453 5 234 11.255 10.575 9.954 9.385 8 863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 13.004 12 106 11.296 10.563 9.899 9.295 8.745 8 244 7.786 7.367 6.628 6.002 5.724 13.865 12.849 11.938 11.118 10.3809712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 14.718 | 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8 313 7.824 6.974 6265 5.954 15.562 14 292 13.166 12. 166 11.274 10.477 | 9.763 9.122 8.544 8.022 7.120 6.373 6047 16.398 14.992 13.754 12 659 11 690 10.828 10.059 9.372 8.756 8201 7.250 6.467 6.128 17226 15.678 14.324 13.134 12.085 11.158 10 336 9.604 8.950 8.365 7.366 6.550 6.198 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6 259 18.857 17 011 15 415 14.029 12 821 | 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10 201 9.442 7.645 6.743 6.359 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9580 8.883 7718 6.792 6.399 21.243 18.914 16.936 15 247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 6.835 6.434 22.023 19.523 17 413 15.622 14.094 12.783 11.654 10 675 9.8239.077 7.843 6.873 6.484 22.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 9.929 9.161 7 896 6.906 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9237 6.491 7.943 6.935 24 316 21 281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 6.514 7984 6.961 25.066 21.844 19.188 16 984 15.141 13.591 12.278 11.158 10.1989.370 6.534 8,022 6.983 25.808 22 396 19.600 17 292 15.372 13.765 12.409 11 258 10.274 9.427 6.551 8.055 7003 6.566 32835 27.355 23.115 19.793 17 159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 6.642 39.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 7.133 6.661 8.772 21 22 23 24 25 FIT 26 27 28 29 30 R P 40 50 RE Print Done Done Reference Future Value of $1 5% 1.050 Periods 1 2 3 4 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1217 1.103 1.158 1.216 6% 1.060 1.124 1.191 1.262 1338 7% 1.070 1.145 1225 1.311 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 1.090 1.188 1 295 1.412 1.539 10% 1.100 1210 1.331 1464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 15% 1.150 1.323 1.521 1.749 2011 1.276 6 7 8 9 10 1.062 1.072 1.083 1 094 1 105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.587 1.677 1.772 1.714 1.828 1.949 1 851 1.993 2.144 1.999 2.172 2358 2.159 2.367 2.594 1.974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3252 3.707 2313 2.660 3.059 3.518 4.046 1.384 1426 11 12 13 14 15 1.116 1.127 1.138 1.149 1.161 1.243 1268 1.294 1.319 1 346 1469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2079 1.898 2012 2.133 2.261 2.397 2.105 2332 2 252 2.518 2410 2.720 2.579 2.937 2.759 3.172 2.580 2.813 3066 3342 3.642 2.853 3.138 3.452 3.798 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 4.652 5.350 6.153 7076 8.137 16 17 1.173 1.184 1.196 1.208 1.220 1.373 1.400 1.428 1.457 1.486 1.605 1.653 1.702 1.754 1.806 1.873 1.948 2.026 2.107 2.191 2.183 2.292 2407 2.527 2.653 2 540 2952 3.426 2693 3.159 3.700 2854 3380 3.996 3.026 3.617 4.316 3.2073.870 4.661 3.970 4.328 4.717 5.142 5.604 4.595 5.054 5.560 6.116 6.727 6.130 6.866 7.690 8.613 9.646 8.137 9.276 10.58 12.06 13.74 9.358 10.76 1238 1423 16.37 19 20 21 22 23 24 25 1232 1 245 1.257 1 270 1.516 1.546 1.577 1.608 1.641 4.141 4.430 4.741 5.072 5.427 5.034 5.437 5.871 6.341 6.848 6.109 6.659 7258 7.911 8.623 7.400 8.140 8.954 9.850 10.83 10.80 12.10 13.55 15.18 17.00 15.67 17 86 20.36 23.21 26.46 18 82 21.64 24 89 28.63 32.92 1 282 3386 1.860 2279 2.786 3.400 1.916 2.370 2925 3.604 1.974 2465 3.072 3.820 2033 2563 3225 4.049 2.094 2.666 4 292 2.157 2.772 3.556 4.549 2221 2.883 3.733 4.822 2.288 2.999 3.920 5.112 2357 3.119 4.116 5.418 2427 3.243 4.322 5.743 26 27 28 29 30 1 295 1 308 1.321 1.335 1.348 1.673 1.707 1.741 1.776 1.811 5.807 6.214 6.649 7.114 7.612 7.396 7988 8.627 9317 10.06 9.399 10 25 11.17 12.17 13.27 11.92 19.04 13.11 21.32 14.42 23.88 15.86 26.75 17.45 29.96 30.17 34.39 39.20 44 69 50.95 37 86 43.54 50 07 57.58 66.21 40 1.489 7040 10 29 14.97 21.72 31.41 45.26 93.05 1889 2679 22083.262 4.801 2692 4.384 7.107 50 1.645 11.47 18.42 29.46 46.90 74.36 117.4 289.0 7002 1,084 Print Done Done - alpi Reference 15% 1.000 OW a Periods 1 2 3 4 5 2.150 1% 2% 1.000 1.000 2010 2020 3.030 3.060 4.060 4.122 5.101 5 204 3% 1.000 2.030 3.091 4.184 5.309 Future Value of Ordinary Annuity of $1 4% 5% 6% 7% 8% 9% 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2050 2.060 2070 2.080 2.090 3.122 3153 3.184 3215 3.246 4.246 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 3.278 3.473 4.993 6.742 Ye 7.153 6 7 8 9 10 6.152 6.308 7.214 7.434 8.286 8.583 9.369 9.755 10.46 10.95 6.468 7.662 8.892 10.16 11.46 6.633 7.898 9.214 10.58 12.01 6.802 8.142 9.549 11.03 12.58 6.975 8394 9.897 11.49 13.18 8.654 10.260 11.98 13.82 7336 8.923 10.64 12.49 14.49 7.523 9.200 11.03 13.02 15.19 7.716 9.487 11.44 13.58 15.94 8.115 10.09 12.30 14.78 17.55 8,536 10.73 13.23 16.09 19.34 8.754 11.07 13.73 16.79 20.30 11 12 13 14 15 11.57 12.68 13.81 14.95 16.10 12.17 13.41 14.68 15.97 17.29 12.81 14.19 15.62 17.09 18.60 13.49 15.03 16.63 18.29 20.02 14 21 15.92 17.71 19.60 21.58 14.97 16.87 18.88 21.02 23.28 15.78 17.89 20.14 22.55 25.13 16.65 18.98 21.50 24.21 27.15 17.56 20.14 22.95 26.02 29.36 18.53 21.38 24.52 27.98 31.77 20.65 24.13 28.03 32.39 37.28 23.04 27.27 32.09 37.58 43.84 24.35 29.00 34.35 40 50 47.58 16 17 18 19 20 17.26 18.43 19.61 20.81 22.02 18.64 20.01 21.41 22.84 24 30 20.16 21.76 23.41 25.12 26.87 21.82 23.70 25.65 27.67 29.78 23.66 25.84 28.13 30.54 33.07 25.67 28.21 30.91 33.76 36.79 27.89 30.84 34.00 37 38 41.00 30.32 33.75 37.45 41.45 45.76 33.00 36.97 41.30 46.02 51.16 35.95 40.54 45.60 51.16 57.28 42.75 48.88 55.75 63.44 72.05 50.98 59.12 68 39 78.97 91.02 55.72 65.08 75.84 88 21 1024 118.8 1376 21 22 23 24 25 31.97 34.25 36.62 39.08 35.72 38.51 41.43 44.50 47.73 39.99 43.39 47.00 50.82 54.86 44.87 49.01 53.44 58.18 50.42 55.46 60.89 66.76 73.11 56.76 64.00 62.87 71.40 69.53 79.54 76.79 88.50 84.70 98.35 81.70 92.50 104.6 118.2 1333 104.8 1204 138.3 158.7 181.9 1593 1842 2128 41.65 63.25 23 24 25.78 28.68 24.47 27 30 30.54 25.72 28 85 32.45 26.97 30.42 34.43 28.24 32.03 36.46 29.53 33.67 38.55 30.82 35.34 40.71 32.13 37.05 42.93 33.45 38.79 45.22 34.78 40.57 47.58 1092 121.1 150.3 1694 na 26 27 28 29 30 44.31 47.08 49.97 52.97 56.08 51.11 54.67 58.40 6232 66.44 59.16 63.71 68.53 73.64 79.06 68 68 74.48 80.70 87.35 94.46 79.95 8735 95.34 104.0 113.3 93.32 102.7 113.0 124.1 136.3 134.2 1907 2083 238,5 2729 3121 356.8 245.7 283.6 327.1 3772 434.7 148.6 164.5 214.6 2413 eful 40 48.89 60.40 75.40 95.03 120.8 154.8 199.6 259.1 337.9 442.6 767.1 1,342 1,779 urg 50 64.46 84.58 112.8 152.7 209.3 2903 4065 573.8 815.1 1,164 2,400 4,995 7,218 eg evi Print upi Done Done (Click the icon to view Present Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10%. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (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. 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 Net Cash Inflows Year Amount Invested Annual Accumulated 0 $ 2,000,000 1 2 3 4 5 6 7 8 (Round your answer to one decimal place.) The payback for Option 1 (refurbish current machine) is years. 3 Question Help o (Click the icon to view Present Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10%. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (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. 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 $ 3,600,000 1 2 3 4 5 6 7 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 a minus sign for a negative net present value.) Net Cash Present PV Factor (i = 10%) Years Inflow Value Present value of each year's inflow: 1 In 21 Choose from any list or enter any number in the input fields and then continue to the next question (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10% (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Read the requirements. 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 present value.) PV Factor Net Cash Inflow Present Value (i = 10%) Years 1 2 3 Present value of each year's inflow (n = 1) (n=2) (n = 3) (n = 4) (n = 5) (n = 6) (n = 7) 4 5 6 7 8 (n = 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.) Net Cash Present PV Factor (i = 10%) Inflow Years Value 1 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 Choose from any list or enter any number in the input fields and then continue to the next question. (Click the icon to view Present Value of $1 table.) Gilpin Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gilpin expects the following net cash inflows from the two options: BE: (Click the icon to view the net cash flows.) Gilpin uses straight-line depreciation and requires an annual return of 10%. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (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. 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.) Net Cash Present PV Factor (i = 10%) Years Inflow Value 1 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) (n=9) 5 6 7 8 9 10 (n = 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 X.XX.) = Profitability index Refurbish Purchase Requirement 2. Which option should Gilpin choose? Why? Review your answers in Requirement 1. Gilpin should choose payback period, because this option has a NPV, and its profitability index is an ARR that is the other option, a Choose from any list or enter any number in the input fields and then continue to the next question. i More Info -X The company is considering two options. Option 1 is to refurbish the current machine at a cost of $2,000,000. If refurbished, Gilpin 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 $3,600,000. A new machine would last 10 years and have no residual value. Print Done itial investment 1 Data Table Year Refurbish Current Purchase New Machine Machine 1 $ 980,000 $ 2,580,000 560,000 420,000 640,000 500,000 360,000 280,000 220,000 1 oo Voo A W N 140,000 140,000 220,000 220,000 140,000 140,000 220,000 220,000 10 220,000 $ 2,800,000 $ 5,400,000 Total Print Done Reference Present Value of $1 3% 0.971 0.943 Periods 1 2 3 4 5 1% 0.990 0.980 0.971 0.961 0.951 2% 0.980 0.961 0.942 0.924 0.906 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.864 0823 0.784 6% 7% 0.943 0.935 0.890 0.873 0.840 0.816 0.792 0.763 0.747 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 12% 0 893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 15% 0.870 0.756 0.658 0.572 0.497 0.915 0.888 0.863 0.596 0.547 6 7 8 9 10 0.942 0.933 0.923 0.914 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.666 0.665 0.623 0.627 0 582 0.592 0.544 0.558 0.508 0.630 0.583 0.540 0.500 0.463 0.502 0.564 0.507 0.513 0.452 0.467 0.404 0.424 0.361 0.386 0322 0.456 0.400 0.351 0.308 0.270 0.432 0.376 0.327 0.284 0.247 0.460 0.422 0.475 0.444 11 12 13 14 15 0.896 0.887 0.879 0.870 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0 650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0469 0.442 0.417 0.415 0.429 0.397 0.368 0.340 0.315 0.388 0.356 0.326 0 299 0.275 0.350 0.319 0.290 0.263 0.239 0.287 0.257 0.229 0205 0.183 0.237 0.208 0.182 0.160 0.140 0215 0.187 0.163 0.141 0.123 0.388 0.362 16 17 18 19 20 0.853 0.728 0.844 0.714 0.836 0.700 0.828 0.686 0.8200.673 0.623 0.605 0.587 0.570 0554 0.534 0.513 0.494 0475 0.456 0.458 0436 0.416 0.396 0.377 0.394 0.371 0.350 0.331 0.312 0.339 0 317 0.296 0.277 0.258 0.292 0.270 0.250 0.232 0.215 0.252 0.231 0.212 0.194 0.178 0.218 0.198 0.180 0.164 0.149 0.163 0.146 0.130 0.116 0.104 0.123 0.108 0.095 0.107 0.093 0.081 0.070 0.061 0.083 0.073 0.242 0.226 21 22 23 24 25 0.811 0.660 0.803 0.647 0.795 0634 0.7880.622 0.780 0.610 0.538 0.522 0.507 0.492 0.478 0.439 0.359 0.422 0.342 0.406 0.326 0.3900 310 0.375 0.295 0.294 0.278 0.262 0247 0233 0.211 0.197 0.184 0.199 0.184 0.170 0.158 0.146 0.164 0.150 0.138 0.126 0.116 0.135 0.093 0.123 0.083 0.112 0.074 0.102 0.066 0.092 0.059 0 064 0.056 0.049 0.043 0.038 0053 0.046 0.040 0.035 0.030 26 27 28 29 30 0.772 0.598 0.764 0.586 0.757 0.574 0.749 0.563 0.742 0.552 0464 0.450 0.437 0.424 0.412 0 361 0.347 0.333 0.321 0.308 0 281 0.268 0.255 0.243 0.231 0.220 0207 0.196 0.185 0.174 0.172 0.161 0.150 0.141 0.131 0.135 0.125 0.116 0.107 0.099 0.106 0.084 0.098 0.076 0 090 0.069 0.082 0.063 0.075 0.057 0.053 0.047 0.042 0.037 0.033 0.033 0.029 0.026 0.022 0.020 0.026 0.023 0.020 0.017 0.015 40 0.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.011 0.005 0.004 50 0.608 0.372 0.228 0.141 0.087 0.054 0.034 0.021 0.013 0.009 0.003 0.001 0.001 Print Done Fas , GIMT ITUCK IS X Reference Present Value of Ordinary Annuity of $1 vo Periods 1 2 3 4 5 1% 2% 0.990 0.980 1.970 1.942 2.941 2.884 3.902 3.808 4.8534.713 3% 0.971 1.913 2.829 3.717 4.580 4% 0.962 1.886 2.775 3.630 4.452 5% 0.952 1.859 2.723 3.546 4.329 6% 0.943 1.833 2.673 3.465 4212 7% 0.935 1.808 2.624 3.387 4.100 8% 0.926 1.783 2577 3.312 3.993 9% 0.917 1.759 2.531 3.240 3.890 10% 12% 0.909 0.893 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.605 14% 15% 0.8770870 1.647 1.626 2.322 2 283 2914 2.855 3.433 3.352 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 5.795 5.601 5417 5242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 6.728 6.472 6230 6.002 5.786 5.582 5.389 5.206 5033 4.868 4.564 4.288 4.160 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 8,566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 9.471 8.983 8.530 8.111 7.722 7.360 7024 6.710 6.418 6.145 5.650 5.216 5.019 10.368 9.787 9.253 8.760 8.3067.887 7499 7.139 6.805 6.495 5.938 5.453 5 234 11.255 10.575 9.954 9.385 8 863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 13.004 12 106 11.296 10.563 9.899 9.295 8.745 8 244 7.786 7.367 6.628 6.002 5.724 13.865 12.849 11.938 11.118 10.3809712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 14.718 | 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8 313 7.824 6.974 6265 5.954 15.562 14 292 13.166 12. 166 11.274 10.477 | 9.763 9.122 8.544 8.022 7.120 6.373 6047 16.398 14.992 13.754 12 659 11 690 10.828 10.059 9.372 8.756 8201 7.250 6.467 6.128 17226 15.678 14.324 13.134 12.085 11.158 10 336 9.604 8.950 8.365 7.366 6.550 6.198 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6 259 18.857 17 011 15 415 14.029 12 821 | 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10 201 9.442 7.645 6.743 6.359 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9580 8.883 7718 6.792 6.399 21.243 18.914 16.936 15 247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 6.835 6.434 22.023 19.523 17 413 15.622 14.094 12.783 11.654 10 675 9.8239.077 7.843 6.873 6.484 22.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 9.929 9.161 7 896 6.906 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9237 6.491 7.943 6.935 24 316 21 281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 6.514 7984 6.961 25.066 21.844 19.188 16 984 15.141 13.591 12.278 11.158 10.1989.370 6.534 8,022 6.983 25.808 22 396 19.600 17 292 15.372 13.765 12.409 11 258 10.274 9.427 6.551 8.055 7003 6.566 32835 27.355 23.115 19.793 17 159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 6.642 39.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 7.133 6.661 8.772 21 22 23 24 25 FIT 26 27 28 29 30 R P 40 50 RE Print Done Done Reference Future Value of $1 5% 1.050 Periods 1 2 3 4 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1217 1.103 1.158 1.216 6% 1.060 1.124 1.191 1.262 1338 7% 1.070 1.145 1225 1.311 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 1.090 1.188 1 295 1.412 1.539 10% 1.100 1210 1.331 1464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 15% 1.150 1.323 1.521 1.749 2011 1.276 6 7 8 9 10 1.062 1.072 1.083 1 094 1 105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.587 1.677 1.772 1.714 1.828 1.949 1 851 1.993 2.144 1.999 2.172 2358 2.159 2.367 2.594 1.974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3252 3.707 2313 2.660 3.059 3.518 4.046 1.384 1426 11 12 13 14 15 1.116 1.127 1.138 1.149 1.161 1.243 1268 1.294 1.319 1 346 1469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2079 1.898 2012 2.133 2.261 2.397 2.105 2332 2 252 2.518 2410 2.720 2.579 2.937 2.759 3.172 2.580 2.813 3066 3342 3.642 2.853 3.138 3.452 3.798 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 4.652 5.350 6.153 7076 8.137 16 17 1.173 1.184 1.196 1.208 1.220 1.373 1.400 1.428 1.457 1.486 1.605 1.653 1.702 1.754 1.806 1.873 1.948 2.026 2.107 2.191 2.183 2.292 2407 2.527 2.653 2 540 2952 3.426 2693 3.159 3.700 2854 3380 3.996 3.026 3.617 4.316 3.2073.870 4.661 3.970 4.328 4.717 5.142 5.604 4.595 5.054 5.560 6.116 6.727 6.130 6.866 7.690 8.613 9.646 8.137 9.276 10.58 12.06 13.74 9.358 10.76 1238 1423 16.37 19 20 21 22 23 24 25 1232 1 245 1.257 1 270 1.516 1.546 1.577 1.608 1.641 4.141 4.430 4.741 5.072 5.427 5.034 5.437 5.871 6.341 6.848 6.109 6.659 7258 7.911 8.623 7.400 8.140 8.954 9.850 10.83 10.80 12.10 13.55 15.18 17.00 15.67 17 86 20.36 23.21 26.46 18 82 21.64 24 89 28.63 32.92 1 282 3386 1.860 2279 2.786 3.400 1.916 2.370 2925 3.604 1.974 2465 3.072 3.820 2033 2563 3225 4.049 2.094 2.666 4 292 2.157 2.772 3.556 4.549 2221 2.883 3.733 4.822 2.288 2.999 3.920 5.112 2357 3.119 4.116 5.418 2427 3.243 4.322 5.743 26 27 28 29 30 1 295 1 308 1.321 1.335 1.348 1.673 1.707 1.741 1.776 1.811 5.807 6.214 6.649 7.114 7.612 7.396 7988 8.627 9317 10.06 9.399 10 25 11.17 12.17 13.27 11.92 19.04 13.11 21.32 14.42 23.88 15.86 26.75 17.45 29.96 30.17 34.39 39.20 44 69 50.95 37 86 43.54 50 07 57.58 66.21 40 1.489 7040 10 29 14.97 21.72 31.41 45.26 93.05 1889 2679 22083.262 4.801 2692 4.384 7.107 50 1.645 11.47 18.42 29.46 46.90 74.36 117.4 289.0 7002 1,084 Print Done Done - alpi Reference 15% 1.000 OW a Periods 1 2 3 4 5 2.150 1% 2% 1.000 1.000 2010 2020 3.030 3.060 4.060 4.122 5.101 5 204 3% 1.000 2.030 3.091 4.184 5.309 Future Value of Ordinary Annuity of $1 4% 5% 6% 7% 8% 9% 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2050 2.060 2070 2.080 2.090 3.122 3153 3.184 3215 3.246 4.246 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 3.278 3.473 4.993 6.742 Ye 7.153 6 7 8 9 10 6.152 6.308 7.214 7.434 8.286 8.583 9.369 9.755 10.46 10.95 6.468 7.662 8.892 10.16 11.46 6.633 7.898 9.214 10.58 12.01 6.802 8.142 9.549 11.03 12.58 6.975 8394 9.897 11.49 13.18 8.654 10.260 11.98 13.82 7336 8.923 10.64 12.49 14.49 7.523 9.200 11.03 13.02 15.19 7.716 9.487 11.44 13.58 15.94 8.115 10.09 12.30 14.78 17.55 8,536 10.73 13.23 16.09 19.34 8.754 11.07 13.73 16.79 20.30 11 12 13 14 15 11.57 12.68 13.81 14.95 16.10 12.17 13.41 14.68 15.97 17.29 12.81 14.19 15.62 17.09 18.60 13.49 15.03 16.63 18.29 20.02 14 21 15.92 17.71 19.60 21.58 14.97 16.87 18.88 21.02 23.28 15.78 17.89 20.14 22.55 25.13 16.65 18.98 21.50 24.21 27.15 17.56 20.14 22.95 26.02 29.36 18.53 21.38 24.52 27.98 31.77 20.65 24.13 28.03 32.39 37.28 23.04 27.27 32.09 37.58 43.84 24.35 29.00 34.35 40 50 47.58 16 17 18 19 20 17.26 18.43 19.61 20.81 22.02 18.64 20.01 21.41 22.84 24 30 20.16 21.76 23.41 25.12 26.87 21.82 23.70 25.65 27.67 29.78 23.66 25.84 28.13 30.54 33.07 25.67 28.21 30.91 33.76 36.79 27.89 30.84 34.00 37 38 41.00 30.32 33.75 37.45 41.45 45.76 33.00 36.97 41.30 46.02 51.16 35.95 40.54 45.60 51.16 57.28 42.75 48.88 55.75 63.44 72.05 50.98 59.12 68 39 78.97 91.02 55.72 65.08 75.84 88 21 1024 118.8 1376 21 22 23 24 25 31.97 34.25 36.62 39.08 35.72 38.51 41.43 44.50 47.73 39.99 43.39 47.00 50.82 54.86 44.87 49.01 53.44 58.18 50.42 55.46 60.89 66.76 73.11 56.76 64.00 62.87 71.40 69.53 79.54 76.79 88.50 84.70 98.35 81.70 92.50 104.6 118.2 1333 104.8 1204 138.3 158.7 181.9 1593 1842 2128 41.65 63.25 23 24 25.78 28.68 24.47 27 30 30.54 25.72 28 85 32.45 26.97 30.42 34.43 28.24 32.03 36.46 29.53 33.67 38.55 30.82 35.34 40.71 32.13 37.05 42.93 33.45 38.79 45.22 34.78 40.57 47.58 1092 121.1 150.3 1694 na 26 27 28 29 30 44.31 47.08 49.97 52.97 56.08 51.11 54.67 58.40 6232 66.44 59.16 63.71 68.53 73.64 79.06 68 68 74.48 80.70 87.35 94.46 79.95 8735 95.34 104.0 113.3 93.32 102.7 113.0 124.1 136.3 134.2 1907 2083 238,5 2729 3121 356.8 245.7 283.6 327.1 3772 434.7 148.6 164.5 214.6 2413 eful 40 48.89 60.40 75.40 95.03 120.8 154.8 199.6 259.1 337.9 442.6 767.1 1,342 1,779 urg 50 64.46 84.58 112.8 152.7 209.3 2903 4065 573.8 815.1 1,164 2,400 4,995 7,218 eg evi Print upi Done Done