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: (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. - X Requirement 1. Compute this project's NPV using Eon Data table Use the following table to calculate the net present valu XXXX. Use parentheses or a minus sign for a negative Years Year 3 Year 1 Present value of each year's inflow: (n = 1) Year 2 Present value of each year's inflow: (n=2) Present value of each year's inflow: (n = 3) Present value of each year's inflow: (n = 4) Present value of each year's inflow: (n = 5) Present value of each year's inflow: (n = 6) Total PV of cash inflows Year 4 Year 5 Year 6 Year 0 Initial investment Get more help. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Print $ 260,000 252,000 222,000 214,000 205,000 178,000 Done 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: Click the icon to view the projected net cash inflows.) (Click the icon to view Present Value of Ordinary Annuity of $1 (Click the icon to view Present Value of $1 table.) table.) Read the requirements. ACCOR Requirement 1. Compute this project's NPV using Eon's 14% 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 Inflow PV Factor (i = 14%) Years Present Value Year 3 Year 1 Present value of each year's inflow: (n = 1) Year 2 Present value of each year's inflow: (n=2) Present value of each year's inflow: (n = 3) Present value of each year's inflow: (n = 4) Present value of each year's inflow: (n = 5) Present value of each year's inflow: (n = 6) Total PV of cash. Year 4 Year 5 Year 6 Year 0 Initial investment 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: Click the icon to view the projected net cash inflows.) (Click the icon to view Present Value of Ordinary Annuity of $1 (Click the icon to view Present Value of $1 table.) table.) Read the requirements. www Eon Industries invest in the equipment. Requirement 2. Eon could refurbish the equipment at the end of six years for $100,000. The refurbished equipment could be used one more year, providing $76,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $53,000 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.) Calculate the NPV of the refurbishment. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for cash outflows and for a negative net present value.) Cash (outflow)/inflow PV Factor (i = 14%) Present Value Refurbishment at the end of Year 6 (n = 6) Cash inflows in Year 7 (n=7) Residual value (n = 7) Net present value of the refurbishment Net present value of the refurbishment The refurbishment provides a of the equipment. Therefore, the refurbishment investment. to overcome the original NPV alter Eon Industries' original decision regarding the equipment NPV. The refurbishment NPV is
