he icon to vie X he icon to vie Data table we of $1 table quirements. Modernize Replace Initial investment in 2018 33,800,000 $ 64,500,000 Terminal disposal value in 2024 6,800,000 $ 14,800,000 nt 1. Calcula Useful life 7 years 7 years nine the cash Total annual cash operating cost per prototype chip $ 94,000 $ 82,000 sh ou zero.) Modern Chips uses straight-line depreciation, assuming zero terminal disposal value. For simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of 2018, and all transactions thereafter occur on the last day of the year. Modern Chips' required rate of return is 18%. There is no difference between the modernize and replace alternatives in terms of 2018 required working capital. Modern Chips has a special waiver on income taxes until 2024. 2018 2019 2020 Print Done 2021 2022 2023Modern Chips is a manufacturer of prototype chips based in Dublin, Ireland. Next year, in 2018, Modern Chips expects to deliver 540 prototype chips at an average price of $110,000. Modern Chips' marketing vice president forecasts growth of 55 prototype chips per year through 2024. That is, demand will be 540 in 2018, 595 in 2019, 650 in 2020, and so on. i (Click the icon to view additional information.) (Click the icon to view the data on the two options available and additional information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements.Requirement 1. Calculate the cash inflows and outflows of the modernize and replace alternatives over the 2018 - 2024 period. First, determine the cash inflows and outflows of the modernize alternative over the 2018 to 2024 period. (Use a minus sign or parentheses for a cash outflows. If a box is not used in the table, leave that box empty, do not enter a zero.) Units Net cash Initial Proceeds from Year sold contributions investments sale of equipment Jan 1, 2018 Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Submit testNext, determine the cash inflows and outflows of the replace alternative over the 2018 to 2024 period. (Use a minus sign or parentheses for a cash outflows. If a box is not used in the table, leave that box empty, do not enter a zero.) Units Net cash Initial Proceeds from Year sold contributions investments sale of equipment Jan 1, 2018 Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023Requirement 2. Calculate payback period for the modernize and replace alternatives. (Round your answers to two decimal places.) The payback period in years, for the investment assuming the modernize alternative is The payback period in years, for the investment assuming the replace alternative is Requirement 3. Calculate net present value of the modernize and replace alternatives. Calculate the net present value of the modernize alternative. (Enter the factors to three decimal places, X.XXX, and then round all currency amounts to the nearest whole dollar.) Net Cash Present Value PV factor Inflow of Cash Flows Net initial investment Dec 31, 2018Requirement 3. Calculate net present value of the modernize and replace alternatives. Calculate the net present value of the modernize alternative. (Enter the factors to three decimal places, X.XXX, and then round all currency amounts to the nearest whole dollar.) Net Cash Present Value PV factor Inflow of Cash Flows Net initial investment Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 = Dec 31, 2021 = Dec 31, 2022Net present value Requirement 4. What factors should Modern Chips consider in choosing between the alternatives? Using the payback period, the alternative is preferred to the alternative. Using the NPV method, the alternative is preferred as it is then the alternative. Nonfinancial qualitative factors considered. Submit test