HT Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 9% based on the rate of return it must pay its owners and creditors. Using atrate, Waterways then uses different methods to determine the best decisions for making capital outlays This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster costless to run, provide for more accurate trench diaging, have comfort eatures for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes The following information is available to use in deciding whether to purchase the new backho Old Backhoes New Backhoes Purchase cost when new 391,500 $204.004 Salvage value now $41,500 Investment in major overhaul needed in next year $54468 Salvage value in 8 years $14.900 $91,000 Remaining life years Byears Net cash flow generated each year $30,600 $44.400 $54.468 ed each year Click here to view PV table (a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint For the old machine the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment (1) Using the represent Value method for buying new or keeping the old. For calculation purposes se 5 decimal places as displayed in the factor table provided the represent value is negotive, use either a negative sin preceding the number -45 or parentheses (45) Round final answer to decimal places, s 5,275) New Backhoes Old Backhoes Net Present Value $ (1) Using the net present value method for buying new or keeping the old. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. If the net present value is negative, use eith negative sin preceding the number es-45 or parentheses es (45). Round final onswer to decimal places. 5.275) 08:50 Hide New Backhoes Old Backhoes Net Present Value $ Waterways should buy New Backhoes o equipment. (2) Using the payback method for each choice. (Hint:For the old machine, evaluate the payback of an overhaul) (Round answers to 2 decimal places, es 1.25) New Backhoes Old Backhoes Payback Period years Waterways should retano Backhoest equipment. (3) Comparing the profitability Index for each choice. Round answers to 2 New Backhoes Old Backhoes Profitability Index Waterways should retain t he equipment Waterways should retain Old Backhoes e equipment. (3) Comparing the profitability index for each choice. (Round answers to 2 decimal places, s. 1.25) New Backhoes Old Backhoes Profitability Index Waterways should retain Old Backhoes + equipment. Calculate the internal rate of return factor for the new and old blackhoes. (Round answers to 5 decimal places, s. 5.27647) New Backhoes Old Backhoes IRR Factor (4) Comparing the internal rate of return for each choice to the required 9% discount rate Waterways should retain achos equipment, Save for later Attempts: Anment sent to Gradbook Your des bin d