Garrett Boone, Riverbed Enterprises' vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $297.934 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $35,000 per year. He also believes the lathe will reduce energy costs by $3,500 per year. If he purchases the new lathe, he will be able to sell the old lathe for $5,100. Click here to view the factor table. (a) Calculate the lathe's internal rate of return. (Round answer to O decimal places, e.g. 25%.) Internal rate of return % (b) If Riverbed Enterprises uses a 8% hurdle rate, should Garrett purchase the lathe? (c) Without doing any calculations, what do you know about the lathe's net present value? Net present value will be Present value of $1 received in n periods. 0.8116 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 0.8734 0.8573 0.8417 0.8264 0.7972 0.7831 0.7695 0.7432 0.7182 0.6944 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931. 0.6750 0.6407 0.6086 0.5787 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5523 0.5158 0.4823 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4761 0.4371 0.4019 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 1 0.9615 0.9524 0.9434 2 3 4 5 0.9246 0.9070 0.8900 0.8890 0.8638 0.8396 0.8548 0.8227 0.7921 0.8219 0.7835 0.7473 68449 7 10 0.7903 0.7462 0.7050 0.6663 0.7599 0.7107 0.6651 0.6227 0.7307 0.6768 0.6274 0.5820 0.7026 0.6446 0.5919 0.5439 0.6756 0.6139 0.5584 0.5083 11 12 13 14 15 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 04104 0.3704 0.3349 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3538 0.3139 0.2791 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3050 0.2660 0.2326 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2630 0.2255 0.1938) 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2267 0.1911 0.1615 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.1954 0.1619 0.1346 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1685 0.1372 0.1122 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1452 0.1163 0.0935 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1252 0.0985 0.0779 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1079 0.0835 0.0649 61228 17 19 20 0.5339 0.4581 0.3936 0.3387 0.2919 0.5134 0.4363 0.3714 0.3166 0.2703 0.4936 0.4155 0.3503 0.2959 0.2502 0.4746 0.3957 0.3305 0.2765 0.2317 0.4564 0.3769 0.3118 0.2584 0.2145 $1 0.2519 0.2176 0.1883 0.1631 0.2311 0.1978 0.1696 0.1456 0.2120 0.1799 0.1528 0.1300 0.1945 0.1635 0.1377 0.1161 0.1784 0.1486 0.1240 0.1037 0.0868 0.1415 0.1229 0.0930 0.0708 0.0541 0.1252 0.1078 0.0802 0.0600 0.0451 0.1108 0.0946 0.0691 0.0508 0.0376 0.0981 0.08291 0.0596 0.0431 0.0313 0.0728 0.0514 0.0365 0.0261 PV= (1+i)" APPENDIX 9.2 Present value of an annuity of $1 per period. Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 1 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 2 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 3 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 4 3.6299 3.5460 5 4.4518 4.3295 3.4651 4.2124 3.3872 3.3121 3.2397 3.1698 4.1002 3.9927 3.8897 3.7907 3.1024 3.6959 0.8621 1.6681 1.6467 1.5656 1.6052 1.5278 2.3216 2.3612 2.2459 2.1743 2.1065 2.9137 2.7982 3.0373 2.9745 2.6901 2.5887 3.2743 3.1272 2.9906 3.6048 3.5172 3.4331 0.8475 0.8333 68129 5.2421 6.0021 6.7327 5.0757 4.9173 5.7864 5.5824 6.4632 6.2098 4.7665 4.6229 4.4859 4.3553 5.3893 5.2064 5.0330 4.8684 5.9713 5.7466 5.5348 5.3349 3.9975 4.2305 4.1114 4.7122 4.5638 4.4226 5.1461 4.9676 3.8887 4.2883 4.0386 3.6847 3.4976 3.3255 3.8115 3.6046 4.7988 4.6389 4.3436 4.0776 3.8372 7.4353 10 8.1109 7.1078 7.7217 7.3601 6.8017 6.5152 6.2469 5.9952 7.0236 6.7101 6.4177 6.1446 5.7590 5.5370 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 5.8892 5.6502 5.4262 5.2161 4.8332 4.4941 4.1925 11 13 14 =2212 8.7605 9.3851 15 10.5631 9.8986 11.1184 10.3797 8.3064 7.8869 8.8633 8.3838 9.9856 9.3936 8.8527 9.2950 9.7122 7.4987 7.1390 6.8052 6.4951 7.9427 7.5361 7.1607 6.8137 8.3577 7.9038 7.4869 7.1034 8.7455 8.2442 7.7862 7.3667 9.1079 8.5595 8.0607 7.6061 6.2065 5.9377 6.4924- 6.7499 6.4235 5.6869 6.1944 5.9176 5.4527 5.6603 5.1971 5.0286 4.6560 4.3271 6.1218 5.8424 6.9819 6.6282 7.1909 6.8109 6.3025 6.4624 6.0021 6.1422 4.7932 5.3423 4.9095 4.5327 5.4675 5.0081 4.6106 5.5755 5.0916 4.4392 4.6755 16 17 18 19 20 13.5903 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 12.1657 11.2741 10.4773 7.5488 9.7632 9.1216 8.5436 8.0216 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8,2014 7.7016 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.9633 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 6.6039 6.2651 6.9740 7.1196 5.2223 6.7291 6.3729 7.2497 6.8399 5.2732 6.4674 5.8178 7.3658 6.9380 6.5504 5.8775 5.3162 7.4694 7.0248 6.6231 5.9288 5.3527 5.6685 5.1624 4.7296 5.7487 4.7746 4.8122 4.8435 4.8696 1 $1- (1+1)" PVA= 1