Gaynor Manufacturing, Inc. has a manufacturing machine that needs attention. 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 $ 1,800,000 UI A W N (Round your answer to one decimal place.) 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 3,600,000 A W N 10 00 - 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 1% 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 PV Factor Present Years Inflow (i = 14%) Value Present value of each year's inflow: (n = 1) 2 (n = 2) w (n = 3) 4 (n = 4) 5 (n = 5) 6 (n = 6) 7 (n = 7) (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 PV Factor Present Years Inflow (i = 14%) Value Present value of each year's inflow: 1 (n = 1) (n = 2) (n = 3) 4 (n = 4) 5 (n = 5) 6 (n = 6) (n = 7) 8 (n = 8) (n = 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 Gaynor choose? Why? Review your answers in Requirement 1. Gaynor should choose because this option has a payback period, an ARR that is the other option, a NPV, and its profitability index isX Data table Refurbish Current Purchase New Year Machine Machine Year 1 $ 560,000 $ 2,730,000 Year 2 430,000 460,000 Year 3 360,000 390,000 Year 4 290,000 320,000 Year 5 220,000 250,000 Year 6 220,000 250,000 Year 7 220,000 250,000 Year 8 220,000 250,000 Year 9 250,000 Year 10 250,000 $ 2,520,000 $ Total 5,400,000More info The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1 00,000. If refurbished. Gaynor 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. Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 3 Period 9 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15 Period 16 Period 1? Period 18 Period 19 Period 20 Period 21 Period 22 Period 23 Period 24 Period 25 Period 26 Period 2? Period 28 Period 29 Period 30 Period 40 Period 50 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.811 0.803 0.795 0.788 0.780 0.772 0.764 0.757 0.749 0.742 0.672 0.608 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.660 0.647 0.634 0.622 0.610 0.598 0.586 0.574 0.563 0.552 0.453 0.372 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.538 0.522 0.507 0.492 0.478 0.464 0.450 0.437 0.424 0.412 0.307 0.228 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.439 0.422 0.406 0.390 0.375 0.361 0.347 0.333 0.321 0.308 0.208 0.141 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 0.436 0.416 0.396 0.377 0.359 0.342 0.326 0.310 0.295 0.281 0.268 0.255 0.243 0.231 0.142 0.087 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.294 0.278 0.262 0.247 0.233 0.220 0.207 0.196 0.185 0.174 0.097 0.054 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258 0.242 0.226 0.211 0.197 0.184 0.172 0.161 0.150 0.141 0.131 0.067 0.034 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0215 0.199 0.184 0.170 0.158 0.146 0.135 0.125 0.116 0.107 0.099 0.046 0.021 0.91 7 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0299 0275 0252 0231 0212 0.194 0.178 0.164 0.150 0.138 0.126 0.116 0.106 0.098 0.090 0.082 0.075 0.032 0.01 3 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.135 0.123 0.112 0.102 0.092 0.084 0.076 0.069 0.063 0.057 0.022 0.009 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.093 0.083 0.074 0.066 0.059 0.053 0.047 0.042 0.037 0.033 0.011 0.003 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0270 0237 0208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.064 0.056 0.049 0.043 0.038 0.033 0.029 0.026 0.022 0.020 0.005 0.001 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.053 0.046 0.040 0.035 0.030 0.026 0.023 0.020 0.017 0.015 0.004 0.001 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.044 0.038 0.033 0.028 0.024 0.021 0.018 0.016 0.014 0.012 0.003 0.001 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.011 0.010 0.008 0.007 0.001 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.031 0.026 0.022 0.018 0.015 0.013 0.010 0.009 0.007 0.006 0.005 0.004 0.001 Present Value of Ordinary Annuity of $1 Periods 20% Period 1 0.333 Period 2 1 .523 Period 3 2.106 Period 4 2.539 Period 5 2.991 Period 6 3.326 Period 7 3.605 Period 3 3.337 Period 3 4.031 Period 10 4.192 Period 11 4.327 Period 12 4.439 Period 13 4.533 Period 14 4.311 Period 15 10.330 9.712 4.675 Period 16 10.333 10.105 4.730 Period 17 11.274 10.477 4.775 Period 13 11.690 10.323 4.312 Period 19 12.035 11.153 4.344 Period 20 12.432 11.470 4.370 Period 21 12.321 11.764 4.391 Period 22 13.133 12.042 4.909 Period 23 13.439 12.303 4.925 Period 24 13.799 12.550 4.937 Period 25 4.943 Period 26 14.375 13.003 4.956 Period 27 14.643 13.211 4.964 Period 23 14.393 13.405 4.970 Period 15.141 13.591 4.975 Period 30 Period 40 Period 50 15.372 13.785 1?.159 15.045 4.979 4.997 4.999