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More info The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,600,000. If refurbished, Mandel 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 $4,200,000. A new machine would last 10 years and have no residual value. Data table Present Value of $1 Present Value of Ordinary Annuity of \$1 Future Value of \$1 Future Value of Ordinary Annuity of \$1 Mandel Manufacturing, Inc. has a manufacturing machine (Click the icon to view Present Va that needs attention. tabie.) (Click the icon to view additional information.) ( Click the icon to view Present V Mandel expects the following net cash inflows from the Ordinary Annuity of $1 table.) two options: (Click the icon to view Future Val table.) Mandel uses straight-line depreciation and requires an (Click the icon to view Future Valt annual return of 10% Ordinary Annuity of $1 table.) Read the requirements. 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). (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). (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of retum) for each of the options. 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.) 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.) id, Mandel should choose because this option has a payback period, in ARR that is the other option, a NPV, and its profitability index is Finally, compute "r each option. (Round to two decimal places X.XX.) Refurbish [ higher than Purchase Requirement 2 lower than andel choose? Why? Review your an the same as Mandel should an ARR that is the other option, a NPV, and its profitability index is is Finally, compute the profitability index for each option. (Round to two decimal places X. XX.) = Profitability index Refurbish = Purchase = Requirement 2. Which option should Mandel cho negative Review your answers in Requirement 1. positive Mandel should choose use this option has a payback period, an ARR that is the other option, a NPV, and its profitability index is Requirement 2. Which option should Mandel choose? Why? shorter Review your answers in Requirement 1. Mandel should choose because this option has a payback period. an ARR that is the other option, a NPV, and its profitability index is \begin{tabular}{l|l|l|l} & & + & + \\ Refurbish & & + \\ Purchase & Profitabilitv index \\ Requirement 2. Which option should Mandel choose? Why? \\ Review your answers in Requirement 1. \\ Mandel should choose \end{tabular} an ARR that is the other option, a NPV, and its profitability index is More info The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,600,000. If refurbished, Mandel 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 $4,200,000. A new machine would last 10 years and have no residual value. Data table Present Value of $1 Present Value of Ordinary Annuity of \$1 Future Value of \$1 Future Value of Ordinary Annuity of \$1 Mandel Manufacturing, Inc. has a manufacturing machine (Click the icon to view Present Va that needs attention. tabie.) (Click the icon to view additional information.) ( Click the icon to view Present V Mandel expects the following net cash inflows from the Ordinary Annuity of $1 table.) two options: (Click the icon to view Future Val table.) Mandel uses straight-line depreciation and requires an (Click the icon to view Future Valt annual return of 10% Ordinary Annuity of $1 table.) Read the requirements. 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). (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). (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of retum) for each of the options. 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.) 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.) id, Mandel should choose because this option has a payback period, in ARR that is the other option, a NPV, and its profitability index is Finally, compute "r each option. (Round to two decimal places X.XX.) Refurbish [ higher than Purchase Requirement 2 lower than andel choose? Why? Review your an the same as Mandel should an ARR that is the other option, a NPV, and its profitability index is is Finally, compute the profitability index for each option. (Round to two decimal places X. XX.) = Profitability index Refurbish = Purchase = Requirement 2. Which option should Mandel cho negative Review your answers in Requirement 1. positive Mandel should choose use this option has a payback period, an ARR that is the other option, a NPV, and its profitability index is Requirement 2. Which option should Mandel choose? Why? shorter Review your answers in Requirement 1. Mandel should choose because this option has a payback period. an ARR that is the other option, a NPV, and its profitability index is \begin{tabular}{l|l|l|l} & & + & + \\ Refurbish & & + \\ Purchase & Profitabilitv index \\ Requirement 2. Which option should Mandel choose? Why? \\ Review your answers in Requirement 1. \\ Mandel should choose \end{tabular} an ARR that is the other option, a NPV, and its profitability index is
