Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows:

Decreased waste	$300,000
Increased quality	400,000
Decrease in operating costs	600,000
Increase in on-time deliveries	200,000

The system will cost $9,000,000 and last 10 years. The company's cost of capital is 12 percent.

The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.

Required:

1. Calculate the payback period for the system. fill in the blank 1 years

2. Calculate the NPV and IRR for the project. Round your IRR answers to the nearest whole percentage value (for example, 15.6% rounds to 16% and should be entered as "16" in the answer box). If the NPV is negative, enter your answer as a negative value.

NPV:
IRR:		%	and		%

3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of $1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of $300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Round your IRR answers to the nearest whole percentage value (for example, 15.6% rounds to 16% and should be entered as "16" in the answer box). If the NPV is negative, enter your answer as a negative value.

Payback period:		years
NPV:
IRR:		%	and		%

5. Suppose that Dearing purchased the new system and that for the first years, the actual net cash flows were $2,000,000 per year. What was the actual payback period? Round your answer to the nearest cent.

fill in the blank years

Chrome File Edit View History Bookmarks Profiles Tab Window Help Mon Dec 4 8:22 PM Chapt x Ceng x b478: Post a x Cenga b4787 Painte ChatC G humai G how x+ C cxp-cdn.cengage.info/protected/prod/assets/b4/7/b4787b9e-cf9c-4593-ac1f-70ca1fa9e9fe.gif?_gda_=st=1701738894 exp=1702343694 ... Maps Gmail YouTube Exhibit 19B.1 Present Value of $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 2% & 4% & 6% & 8% & 10% & 12% & 14% & 16% & 18% & 20% & 22% & 24% & 26% & 28% & 30% & 32% & 40% \\ \hline 1 & 0.980 & 0.962 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 & 0.862 & 0.847 & 0.833 & 0.820 & 0.806 & 0.794 & 0.781 & 0.769 & 0.758 & 0.714 \\ \hline 2 & 0.961 & 0.925 & 0.890 & 0.857 & 0.826 & 0.797 & 0.769 & 0.743 & 0.718 & 0.694 & 0.672 & 0.650 & 0.630 & 0.610 & 0.592 & 0.574 & 0.510 \\ \hline 3 & 0.942 & 0.889 & 0.840 & 0.794 & 0.751 & 0.712 & 0.675 & 0.641 & 0.609 & 0.579 & 0.551 & 0.524 & 0.500 & 0.477 & 0.455 & 0.435 & 0.364 \\ \hline 4 & 0.924 & 0.855 & 0.792 & 0.735 & 0.683 & 0.636 & 0.592 & 0.552 & 0.516 & 0.482 & 0.451 & 0.423 & 0.397 & 0.373 & 0.350 & 0.329 & 0.260 \\ \hline 5 & 0.906 & 0.822 & 0.747 & 0.681 & 0.621 & 0.567 & 0.519 & 0.476 & 0.437 & 0.402 & 0.370 & 0.341 & 0.315 & 0.291 & 0.269 & 0.250 & 0.186 \\ \hline 6 & 0.888 & 0.790 & 0.705 & 0.636 & 0.564 & 0.507 & 0.456 & 0.410 & 0.370 & 0.335 & 0.303 & 0.275 & 0.250 & 0.227 & 0.207 & 0.189 & 0.133 \\ \hline 7 & 0.871 & 0.760 & 0.665 & 0.583 & 0.513 & 0.452 & 0.400 & 0.354 & 0.314 & 0.279 & 0.249 & 0.222 & 0.198 & 0.178 & 0.159 & 0.143 & 0.095 \\ \hline 8 & 0.853 & 0.731 & 0.627 & 0.540 & 0.467 & 0.404 & 0.351 & 0.305 & 0.266 & 0.233 & 0.204 & 0.179 & 0.157 & 0.139 & 0.123 & 0.108 & 0.068 \\ \hline 9 & 0.837 & 0.703 & 0.592 & 0.500 & 0.424 & 0.361 & 0.308 & 0.263 & 0.225 & 0.194 & 0.167 & 0.144 & 0.125 & 0.108 & 0.094 & 0.082 & 0.048 \\ \hline 10 & 0.820 & 0.676 & 0.558 & 0.463 & 0.386 & 0.322 & 0.270 & 0.227 & 0.191 & 0.162 & 0.137 & 0.116 & 0.099 & 0.085 & 0.073 & 0.062 & 0.035 \\ \hline 11 & 0.804 & 0.650 & 0.527 & 0.429 & 0.350 & 0.287 & 0.237 & 0.195 & 0.162 & 0.135 & 0.112 & 0.094 & 0.079 & 0.066 & 0.056 & 0.046 & 0.025 \\ \hline 12 & 0.788 & 0.625 & 0.497 & 0.397 & 0.319 & 0.257 & 0.208 & 0.168 & 0.137 & 0.112 & 0.092 & 0.076 & 0.062 & 0.052 & 0.043 & 0.036 & 0.018 \\ \hline 13 & 0.773 & 0.601 & 0.469 & 0.368 & 0.290 & 0.229 & 0.182 & 0.145 & 0.116 & 0.093 & 0.075 & 0.061 & 0.050 & 0.040 & 0.033 & 0.027 & 0.013 \\ \hline 14 & 0.758 & 0.577 & 0.442 & 0.340 & 0.263 & 0.205 & 0.160 & 0.125 & 0.099 & 0.078 & 0.062 & 0.049 & 0.039 & 0.032 & 0.025 & 0.021 & 0.009 \\ \hline 15 & 0.743 & 0.555 & 0.417 & 0.315 & 0.239 & 0.183 & 0.140 & 0.108 & 0.084 & 0.065 & 0.051 & 0.040 & 0.031 & 0.025 & 0.020 & 0.016 & 0.006 \\ \hline 16 & 0.728 & 0.534 & 0.394 & 0.292 & 0.218 & 0.163 & 0.123 & 0.093 & 0.071 & 0.054 & 0.042 & 0.032 & 0.025 & 0.019 & 0.015 & 0.012 & 0.005 \\ \hline 17 & 0.714 & 0.513 & 0.371 & 0.270 & 0.198 & 0.146 & 0.108 & 0.080 & 0.060 & 0.045 & 0.034 & 0.026 & 0.020 & 0.015 & 0.012 & 0.009 & 0.003 \\ \hline 18 & 0.700 & 0.494 & 0.350 & 0.250 & 0.180 & 0.130 & 0.095 & 0.069 & 0.051 & 0.038 & 0.028 & 0.021 & 0.016 & 0.012 & 0.009 & 0.007 & 0.002 \\ \hline 19 & 0.686 & 0.475 & 0.331 & 0.232 & 0.164 & 0.116 & 0.083 & 0.060 & 0.043 & 0.031 & 0.023 & 0.017 & 0.012 & 0.009 & 0.007 & 0.005 & 0.002 \\ \hline 20 & 0.673 & 0.456 & 0.312 & 0.215 & 0.149 & 0.104 & 0.073 & 0.051 & 0.037 & 0.026 & 0.019 & 0.014 & 0.010 & 0.007 & 0.005 & 0.004 & 0.001 \\ \hline 21 & 0.660 & 0.439 & 0.294 & 0.199 & 0.135 & 0.093 & 0.064 & 0.044 & 0.031 & 0.022 & 0.015 & 0.011 & 0.008 & 0.006 & 0.004 & 0.003 & 0.001 \\ \hline 22 & 0.647 & 0.422 & 0.278 & 0.184 & 0.123 & 0.083 & 0.056 & 0.038 & 0.026 & 0.018 & 0.013 & 0.009 & 0.006 & 0.004 & 0.003 & 0.002 & 0.001 \\ \hline 23 & 0.634 & 0.406 & 0.262 & 0.170 & 0.112 & 0.074 & 0.049 & 0.033 & 0.022 & 0.015 & 0.010 & 0.007 & 0.005 & 0.003 & 0.002 & 0.002 & 0.000 \\ \hline 24 & 0.622 & 0.390 & 0.247 & 0.158 & 0.102 & 0.066 & 0.043 & 0.028 & 0.019 & 0.013 & 0.008 & 0.006 & 0.004 & 0.003 & 0.002 & 0.001 & 0.000 \\ \hline 25 & 0.610 & 0.375 & 0.233 & 0.146 & 0.092 & 0.059 & 0.038 & 0.024 & 0.016 & 0.010 & 0.007 & 0.005 & 0.003 & 0.002 & 0.001 & 0.001 & 0.000 \\ \hline 26 & 0.598 & 0.361 & 0.220 & 0.135 & 0.084 & 0.053 & 0.033 & 0.021 & 0.014 & 0.009 & 0.006 & 0.004 & 0.002 & 0.002 & 0.001 & 0.001 & 0.000 \\ \hline 27 & 0.586 & 0.347 & 0.207 & 0.125 & 0.076 & 0.047 & 0.029 & 0.018 & 0.011 & 0.007 & 0.005 & 0.003 & 0.002 & 0.001 & 0.001 & 0.001 & 0.000 \\ \hline 28 & 0.574 & 0.333 & 0.196 & 0.116 & 0.069 & 0.042 & 0.026 & 0.016 & 0.010 & 0.006 & 0.004 & 0.002 & 0.002 & 0.001 & 0.001 & 0.000 & 0.000 \\ \hline 29 & 0.563 & 0.321 & 0.185 & 0.107 & 0.063 & 0.037 & 0.022 & 0.014 & 0.008 & 0.005 & 0.003 & 0.002 & 0.001 & 0.001 & 0.000 & 0.000 & 0.000 \\ \hline 30 & 0.552 & 0.308 & 0.174 & 0.099 & 0.057 & 0.033 & 0.020 & 0.012 & 0.007 & 0.004 & 0.003 & 0.002 & 0.001 & 0.001 & 0.000 & 0.000 & 0.000 \\ \hline \end{tabular} Pn=A/(1+i) ". Chrome File Edit View History Bookmarks Profiles Tab Window Help Mon Dec 4 8:22 PM Chapt x Ceng x b478: Post a x Cenga b4787 Painte ChatC G humai G how x+ C cxp-cdn.cengage.info/protected/prod/assets/b4/7/b4787b9e-cf9c-4593-ac1f-70ca1fa9e9fe.gif?_gda_=st=1701738894 exp=1702343694 ... Maps Gmail YouTube Exhibit 19B.1 Present Value of $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 2% & 4% & 6% & 8% & 10% & 12% & 14% & 16% & 18% & 20% & 22% & 24% & 26% & 28% & 30% & 32% & 40% \\ \hline 1 & 0.980 & 0.962 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 & 0.862 & 0.847 & 0.833 & 0.820 & 0.806 & 0.794 & 0.781 & 0.769 & 0.758 & 0.714 \\ \hline 2 & 0.961 & 0.925 & 0.890 & 0.857 & 0.826 & 0.797 & 0.769 & 0.743 & 0.718 & 0.694 & 0.672 & 0.650 & 0.630 & 0.610 & 0.592 & 0.574 & 0.510 \\ \hline 3 & 0.942 & 0.889 & 0.840 & 0.794 & 0.751 & 0.712 & 0.675 & 0.641 & 0.609 & 0.579 & 0.551 & 0.524 & 0.500 & 0.477 & 0.455 & 0.435 & 0.364 \\ \hline 4 & 0.924 & 0.855 & 0.792 & 0.735 & 0.683 & 0.636 & 0.592 & 0.552 & 0.516 & 0.482 & 0.451 & 0.423 & 0.397 & 0.373 & 0.350 & 0.329 & 0.260 \\ \hline 5 & 0.906 & 0.822 & 0.747 & 0.681 & 0.621 & 0.567 & 0.519 & 0.476 & 0.437 & 0.402 & 0.370 & 0.341 & 0.315 & 0.291 & 0.269 & 0.250 & 0.186 \\ \hline 6 & 0.888 & 0.790 & 0.705 & 0.636 & 0.564 & 0.507 & 0.456 & 0.410 & 0.370 & 0.335 & 0.303 & 0.275 & 0.250 & 0.227 & 0.207 & 0.189 & 0.133 \\ \hline 7 & 0.871 & 0.760 & 0.665 & 0.583 & 0.513 & 0.452 & 0.400 & 0.354 & 0.314 & 0.279 & 0.249 & 0.222 & 0.198 & 0.178 & 0.159 & 0.143 & 0.095 \\ \hline 8 & 0.853 & 0.731 & 0.627 & 0.540 & 0.467 & 0.404 & 0.351 & 0.305 & 0.266 & 0.233 & 0.204 & 0.179 & 0.157 & 0.139 & 0.123 & 0.108 & 0.068 \\ \hline 9 & 0.837 & 0.703 & 0.592 & 0.500 & 0.424 & 0.361 & 0.308 & 0.263 & 0.225 & 0.194 & 0.167 & 0.144 & 0.125 & 0.108 & 0.094 & 0.082 & 0.048 \\ \hline 10 & 0.820 & 0.676 & 0.558 & 0.463 & 0.386 & 0.322 & 0.270 & 0.227 & 0.191 & 0.162 & 0.137 & 0.116 & 0.099 & 0.085 & 0.073 & 0.062 & 0.035 \\ \hline 11 & 0.804 & 0.650 & 0.527 & 0.429 & 0.350 & 0.287 & 0.237 & 0.195 & 0.162 & 0.135 & 0.112 & 0.094 & 0.079 & 0.066 & 0.056 & 0.046 & 0.025 \\ \hline 12 & 0.788 & 0.625 & 0.497 & 0.397 & 0.319 & 0.257 & 0.208 & 0.168 & 0.137 & 0.112 & 0.092 & 0.076 & 0.062 & 0.052 & 0.043 & 0.036 & 0.018 \\ \hline 13 & 0.773 & 0.601 & 0.469 & 0.368 & 0.290 & 0.229 & 0.182 & 0.145 & 0.116 & 0.093 & 0.075 & 0.061 & 0.050 & 0.040 & 0.033 & 0.027 & 0.013 \\ \hline 14 & 0.758 & 0.577 & 0.442 & 0.340 & 0.263 & 0.205 & 0.160 & 0.125 & 0.099 & 0.078 & 0.062 & 0.049 & 0.039 & 0.032 & 0.025 & 0.021 & 0.009 \\ \hline 15 & 0.743 & 0.555 & 0.417 & 0.315 & 0.239 & 0.183 & 0.140 & 0.108 & 0.084 & 0.065 & 0.051 & 0.040 & 0.031 & 0.025 & 0.020 & 0.016 & 0.006 \\ \hline 16 & 0.728 & 0.534 & 0.394 & 0.292 & 0.218 & 0.163 & 0.123 & 0.093 & 0.071 & 0.054 & 0.042 & 0.032 & 0.025 & 0.019 & 0.015 & 0.012 & 0.005 \\ \hline 17 & 0.714 & 0.513 & 0.371 & 0.270 & 0.198 & 0.146 & 0.108 & 0.080 & 0.060 & 0.045 & 0.034 & 0.026 & 0.020 & 0.015 & 0.012 & 0.009 & 0.003 \\ \hline 18 & 0.700 & 0.494 & 0.350 & 0.250 & 0.180 & 0.130 & 0.095 & 0.069 & 0.051 & 0.038 & 0.028 & 0.021 & 0.016 & 0.012 & 0.009 & 0.007 & 0.002 \\ \hline 19 & 0.686 & 0.475 & 0.331 & 0.232 & 0.164 & 0.116 & 0.083 & 0.060 & 0.043 & 0.031 & 0.023 & 0.017 & 0.012 & 0.009 & 0.007 & 0.005 & 0.002 \\ \hline 20 & 0.673 & 0.456 & 0.312 & 0.215 & 0.149 & 0.104 & 0.073 & 0.051 & 0.037 & 0.026 & 0.019 & 0.014 & 0.010 & 0.007 & 0.005 & 0.004 & 0.001 \\ \hline 21 & 0.660 & 0.439 & 0.294 & 0.199 & 0.135 & 0.093 & 0.064 & 0.044 & 0.031 & 0.022 & 0.015 & 0.011 & 0.008 & 0.006 & 0.004 & 0.003 & 0.001 \\ \hline 22 & 0.647 & 0.422 & 0.278 & 0.184 & 0.123 & 0.083 & 0.056 & 0.038 & 0.026 & 0.018 & 0.013 & 0.009 & 0.006 & 0.004 & 0.003 & 0.002 & 0.001 \\ \hline 23 & 0.634 & 0.406 & 0.262 & 0.170 & 0.112 & 0.074 & 0.049 & 0.033 & 0.022 & 0.015 & 0.010 & 0.007 & 0.005 & 0.003 & 0.002 & 0.002 & 0.000 \\ \hline 24 & 0.622 & 0.390 & 0.247 & 0.158 & 0.102 & 0.066 & 0.043 & 0.028 & 0.019 & 0.013 & 0.008 & 0.006 & 0.004 & 0.003 & 0.002 & 0.001 & 0.000 \\ \hline 25 & 0.610 & 0.375 & 0.233 & 0.146 & 0.092 & 0.059 & 0.038 & 0.024 & 0.016 & 0.010 & 0.007 & 0.005 & 0.003 & 0.002 & 0.001 & 0.001 & 0.000 \\ \hline 26 & 0.598 & 0.361 & 0.220 & 0.135 & 0.084 & 0.053 & 0.033 & 0.021 & 0.014 & 0.009 & 0.006 & 0.004 & 0.002 & 0.002 & 0.001 & 0.001 & 0.000 \\ \hline 27 & 0.586 & 0.347 & 0.207 & 0.125 & 0.076 & 0.047 & 0.029 & 0.018 & 0.011 & 0.007 & 0.005 & 0.003 & 0.002 & 0.001 & 0.001 & 0.001 & 0.000 \\ \hline 28 & 0.574 & 0.333 & 0.196 & 0.116 & 0.069 & 0.042 & 0.026 & 0.016 & 0.010 & 0.006 & 0.004 & 0.002 & 0.002 & 0.001 & 0.001 & 0.000 & 0.000 \\ \hline 29 & 0.563 & 0.321 & 0.185 & 0.107 & 0.063 & 0.037 & 0.022 & 0.014 & 0.008 & 0.005 & 0.003 & 0.002 & 0.001 & 0.001 & 0.000 & 0.000 & 0.000 \\ \hline 30 & 0.552 & 0.308 & 0.174 & 0.099 & 0.057 & 0.033 & 0.020 & 0.012 & 0.007 & 0.004 & 0.003 & 0.002 & 0.001 & 0.001 & 0.000 & 0.000 & 0.000 \\ \hline \end{tabular} Pn=A/(1+i)