Eon Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $930,000. Projected net cash inflows are as follows: E: (Click the icon to view the projected net cash inflows.) (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements Requirement 1. Compute this project's NPV using Eon's 16% hurdle rate. Should Eon invest in the equipment? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Net Cash PV Factor i Years Inflow = 16%) Present Value Year 1 Present value of each year's inflow: (n = 1) Year 2 Present value of each year's inflow: (n = 2) Year 3 Present value of each year's inflow: (n = 3) Year 4 Present value of each year's inflow: (n = 4) Year 5 Present value of each year's inflow: (n = 5) Year 6 Present value of each year's inflow: (n = 6) Total PV of cash inflows Year 0 Initial investment Net present value of the project i Requirements - X 1. Compute this project's NPV using Eon's 16% hurdle rate. Should Eon invest in the equipment? 2. Eon could refurbish the equipment at the end of six years for $103,000. The refurbished equipment could be used one more year, providing $74,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $55,000 residual value at the end of year 7. Should Eon invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) i . X Data Table $ Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 263,000 255,000 224,000 214,000 203,000 173,000 Present Value of $1 7% 0.935 0.873 0.816 0.763 0.713 8% 9% 10% 0.926 0.917 0.909 0.857 0.842 0.826 0.794 0.772 0.751 0.735 0.708 0.683 0.681 0.650 0.621 12% 14% 15% 16% 0.893 0.877 0.870 0.862 0.797 0.769 0.756 0.743 0.712 0.675 0.658 0.641 0.636 0.592 0.572 0.552 0.567 0.519 0.497 0.476 18% 20% 0.847 0.833 0.7180.694 0.609 0.579 0.516 0.482 0.437 0.402 Periods 1% 2% 3% 4% 5% 6% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 Period 3 0.971 0.9420.915 0.889 0.864 0.840 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 Period 11 0.896 0.804 0.722 0.650 0.585 0.527 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 Period 15 10 861 / 0 743 10642 0555 n481 0417 0.666 0.623 0.582 0.544 0.508 0.630 0.583 0.540 0.500 0.463 0.596 0.564 0.547 0.513 0.502 0.467 0.460 0.424 0.422 0.386 0.507 0.456 0.432 0.410 0.452 0.400 0.376 0.354 0.404 0.351 0.327 0.305 0.361 0.308 0.284 0.263 0.322 0.270 0.247 0.227 0.370 0.335 0.314 0.279 0.266 0.233 0.225 0.194 0.191 0.162 0.475 0.444 0.415 0.388 0362 0.429 0.388 0.350 0.397 0.356 0.319 0.368 0.326 0.290 0.340 0.299 0.263 0315 0275 10 220 0.287 0.257 0.229 0.205 0183 0.237 0.215 0.195 0.208 0.187 0.168 0.182 0.163 0.145 0.160 0.141 0.125 140 n 123 10 108 0.162 0.135 0.137 0.112 0.116 0.093 0.099 0.078 0084 0065 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 0.218 0.163 0.231 0.1980.146 0.212 0.180 0.130 0.194 0.164 0.116 0.178 0.149 0.104 0.123 0.107 0.093 0.108 0.093 0.080 0.095 0.081 0.069 0.083 0.070 0.060 0.073 0.061 0.051 0.071 0.060 0.051 0.043 0.037 0.054 0.045 0.038 0.031 0.026 Period 16 0.853 0.7280.623 0.534 0.458 Period 17 0.844 0.714 0.605 0.513 0.436 Period 18 0.836 0.700 0.587 0.494 0.416 Period 19 0.828 0.686 0.570 0.475 0.396 Period 20 0.8200.673 0.554 0.456 0.377 Period 21 0.811 0.660 0.538 0.439 0.359 Period 22 0.803 0.647 0.522 0.422 0.342 Period 23 0.795 0.634 0.507 0.4060.326 Period 24 0.788 0.622 0.492 0.390 0.310 Period 25 0.780 0.610 0.478 0.375 0.295 Period 26 0.772 0.598 0.464 0.361 0.281 Period 27 0.764 0.586 0.450 0.347 0.268 Period 28 0.757 0.574 0.437 0.333 0.255 Period 29 0.7490.563 0.424 0.321 0.243 Period 30 0.742 0.5520.412 0.308 0.231 Period 40 0.672 0.453 0.307 0.208 0.142 Period 50 10.608 0.372 1 0.228 | 0.141 | 0.087 0.294 0.242 0.278 0.226 0.262 0.211 0.247 0.197 0.233 0.184 0.199 0.184 0.170 0.158 0.146 0.164 0.135 0.093 0.150 0.123 0.083 0.138 0.112 0.074 0.126 0.1020.066 0.116 0.092 0.059 0.064 0.056 0.049 0.043 0.038 0.053 0.044 0.046 0.038 0.040 0.033 0.035 0.028 0.030 0.024 0.031 0.022 0.026 0.018 0.022 0.015 0.019 0.013 0.0160.010 0.220 0.207 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 0.053 0.033 0.098 0.076 0.047 0.029 0.090 0.069 0.042 0.026 0.082 0.063 0.037 0.022 0.075 0.057 0.033 0.020 0.032 0.022 0.011 0.005 0.026 0.021 0.014 0.009 0.023 0.018 0.011 0.007 0.0200.0160.010 0.006 0.017 0.014 0.008 0.005 0.015 0.012 0.007 0.004 0.097 0.067 0.046 0.0040.003 0.001 0.001 0.054 0.034 0.021 0.013 | 0.009 | 0.003 0.001 0.001 0.001 Present Value of Ordinary Annuity of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 2% 0.990 0.980 1.970 1.942 2.941 2.884 3.902 3.808 4.853 4.713 3% 0.971 1.913 2.829 3.717 4.580 4% 5% 6% 7% 0.962 0.952 0.943 0.935 1.886 1.859 1.833 1.808 2.775 2.723 2.673 2.624 3.630 3.546 3.465 3.387 4.452 4.329 4.212 4.100 8% 0.926 1.783 2.577 3.312 3.993 9% 10% 0.9170.909 1.759 1.736 2.531 | 2 487 3.240 3.170 3.890 3.791 12% 14% 15% 0.893 0.877 0.870 1.690 1.647 1.626 2.4022322 2.283 3.037 2.914 2.855 3.605 3.433 3.352 16% 0.862 1.605 2.246 2.798 3.274 18% 20% 0.847 0.833 1.566 1.528 2.174 2.106 2.690 2.589 3.127 2.991 4.623 4.486 4.355 5.206 5.033 4.868 5.747 5.535 5.335 6.247 5.995 5.759 6.710 6.418 6.145 4.111 3.889 4.564 4.288 4.968 4.639 5.328 4.946 5.650 5.216 3.784 4.160 4.487 4.772 5.019 3.685 4.039 4.344 4.607 4.833 3.498 3.812 4.078 4.303 4.494 3.326 3.605 3.837 4.031 4.192 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 Period 12 11.255 10.575 | 9.954 9.385 8.863 8.384 7.943 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 Period 14 13.004 12.106 | 11.296 | 10.563 9.899 9.295 8.745 Period 15 13 865 12 849 11 938 11 118 110 380 197121 9108 7.139 6.805 6.495 5.938 7.5367.161 | 6.814 6.194 7.904 7.487 7.103 6.424 8.244 7.786 7.367 6.628 8.550 8061 7 606 16811 5.453 5.660 5.842 6.002 6 142 5.234 5.421 5.583 5.724 5 947 5.029 4.656 5.197 4.793 5.342 4.910 5.468 5.008 5575 15 692 4.327 4.439 4.533 4.611 4 675 5.954 6.047 6.128 6.198 6.259 5.669 5.749 5.818 5.877 5.929 5.1624.730 5.222 4.775 5.2734.812 5.316 4.844 5.353 4.870 Period 16 Period 17 Period 18 Period 19 Period 20 Period 21 Period 22 Period 23 Period 24 Period 25 Period 26 Period 27 Period 28 Period 29 Period 30 14.718 13.578 12.561 11.652 10.838 10.106) 9.447 8.851 8.313 7.824 6.9746.265 15.562 14.292 13.166 12.166 11.274 10.4771 9.763 9.122 8.544 8.022 7.1206.373 16.398 14.992 | 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 18.046 16.351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.469 6.623 18.857 | 17.011 15.415 14.029 12.821 11.764 10.836 10.0179.292 8.649 7.562 6.687 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.2019.442 8.772 7.645 6.743 20.456 18.292 16.444 14.857 13.489 12.303 11 272 10.371 9.5808.883 7.718 6.792 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 6.835 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.8239.077 7.843 6.873 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 9.237 7.943 6.935 24.31621.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 6.961 25.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.1989.370 8.022 6.983 25.808 22 396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.312 6.359 6.399 6.434 6.464 5.973 6.011 6.044 6.073 6.097 5.384 5.410 5.432 5.451 5.467 4.891 4.909 4.925 4.937 4.948 6.491 6.514 6.534 6.551 6.566 6.118 6.136 6.152 6.166 6.177 5.480 4.956 5.492 4.964 5.5024.970 5.510 4.975 5.517 4.979 Period 40 32.835 27.355 23.115 | 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 6.642 6.233 5.548 4.997 Period 50 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 6.246 5.554 4 999