ColstonColston $$Manufacturing$,$ Inc. has a manufacturing machine that needs attention. LOADING... $($Click the icon to view additional$$ information.$)$ ColstonColston expects the following net cash inflows from the two$$ options: LOADING... $($Click the icon to view the net cash$$ flows.$)$ ColstonColston uses$$ straight$-$line depreciation and requires an annual return of $1616\%....$ Question content area top right Part $1$ LOADING... $($Click the icon to view Present Value of$$ $$1$ table.$)$ LOADING... $($ Click the icon to view Present Value of Ordinary Annuity of$$ $$1$ table.$)$ LOADING... $($Click the icon to view Future Value of$$ $$1$ table.$)$ LOADING... $($Click the icon to view Future Value of Ordinary Annuity of$$ $$1$ table.$)$ Read the requirements LOADING... $.$ Question content area bottom Part $1$ Requirement $1.$ Compute the$$ 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 $0$ $$1,200,00012345678$ Part $2($Round your answer to one decimal$$ place.$)$ The payback for Option $1($refurbish current machine$)$ is years. Part $3$ Now complete the payback schedule for Option $2($purchase$).$ Net Cash Outflows Net Cash Inflows Year Amount Invested Annual Accumulated $0$ $$1,700,00012345678910$ Part $4($Round your answer to one decimal$$ place.$)$ The payback for Option $2($purchase new machine$)$ is years. Part $5$ Compute the ARR$($accounting rate of$$ return$)$ for each of the options. $-$: $=$ ARR Refurbish $-$: $=\%$ Purchase $-$: $=\%$ Part $6$ Compute the NPV for each of the options. Begin with Option $1($refurbish$).($Enter the factors to three decimal places. X$.$XXX$.$ Use parentheses or a minus sign for a negative net present$$ value.$)$ Net Cash PV Factor Present Years Inflow $($i $=16\%)$ Value Present value of each year's inflow: $1($n $=1)2($n $=2)3($n $=3)4($n $=4)5($n $=5)6($n $=6)7($n $=7)8($n $=8)$ Total PV of cash inflows $0$ Initial investment Net present value of the project Part $7$ 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$$ value.$)$ Net Cash PV Factor Present Years Inflow $($i $=16\%)$ Value Present value of each year's inflow: $1($n $=1)2($n $=2)3($n $=3)4($n $=4)5($n $=5)6($n $=6)7($n $=7)8($n $=8)9($n $=9)10($n $=10)$ Total PV of cash inflows $0$ Initial investment Net present value of the project Part $8$Finally$,$ compute the profitability index for each option. $($Round to two decimal places$$ X$.$XX$.)-$: $=$ Profitability index Refurbish $-$: $=$ Purchase $-$: $=$ Part $9$ Requirement $2.$ Which option should ColstonColston $$choose$?$ Why? Review your answers in Requirement $1.$ LOADING... ColstonColston should choose $$ Option $2,$ purchase a new machine Option $1,$ refurbish the current machine because this option has a $$ longer shorter payback$$ period, an ARR that is $$ higher than lower than the same as the other$$ option, a $$ negative positive $$NPV$,$ and its profitability index is $$ higher lower $.$ Colston should choosebecause this option has abecause this option has apayback period, an ARR that ispayback period, an ARR that isthe other option, athe other option, aNPV, and its profitability index isNPV, and its profitability index is$.$