I am having issues find the answers to a homework question in my Managerial Cost Accounting course. We are in the Capital Budgeting chapter. I have included photos of the problem that I have worked, but on page 4, I have circled the area I am having trouble with. Those ARE the correct numbers, but I cannot figure out how to arrive at that answer. All of my work is included. I hope someone can identify where I am going wrong!

If the corrections can be written out, that would be great! I am not allowed to use Excel on the exam, and I need to be sure that I am working it out by hand correctly.If you feel an explanation would be helpful, that would be much appreciated.

21-34 Equipment replacement, no income taxes. Dublin Chips is a manufacturer of prototype chips based in Dublin, Ireland. Next year, in 2018, Dublin Chips expects to deliver 615 prototype chips at an average price of $95,000. Dublin Chips' marketing vice president forecasts growth of 65 prototype chips per year through 2024. That is, demand will be 615 in 2018, 680 in 2019, 745 in 2020, and so on. The plant cannot produce more than 585 prototype chips annually. To meet future demand, Dublin Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $4.200,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the updated plant. The old equipment is retained as part of the modernize alternative. The following data on the two options are available: Modernize Replace Initial investment in 2018 $35,300,000 $66,300,000 Terminal disposal value in 2024 $ 7,500,000 $16,000,000 Useful life 7 years 7 years Total annual cash operating costs per prototype chip $78,500 $66,000 Dublin 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. Dublin Chips' required rate of return is 14%. There is no difference between the modernize and replace alternatives in terms of required working capital. Dublin Chips has a special waiver on income taxes until 2024. Required: 1. Sketch the cash inflows and outflows of the modernize and replace alternatives over the 2018-2024 period. 2. Calculate the payback period for the modernize and replace alternatives. 3. Calculate net present value of the modernize and replace alternatives. 4. What factors should Dublin Chips consider in choosing between the alternatives?CHAPTER 21: CAPITAL BUDGETING HW : 21- 34 ( 1) SKETCH THE CASH IN FLOWS AND OVITLOWS OF ME MODERNIZE AND REPLACE ALTERNATIVES OVER TIME 2018- 2024 POOD ( 1 ) CASH FLOWS FOR MODERNIZING AUTUMNUC : INST. SALE OF UNITS CONTRIBUTIONS YEAR (95,000-78, 500 # 16, 500) AT TECNICADON ( 1 ) (2 ) (3) = (2) * 16, 5003 ( 4 ) (S) Equip - (35, 300,000) - 12/ 31/18 615 x 16, 500 3 10, 147, 500 12 / 31 / 19 680 * 16, 500 = 11, 220,000 12/ 31/ 20 745 x 16, 500 12 , 292, 500 12/ 31/ 21 810 x 16, 580 = 13, 365, 000 12 /31 / 22 875 x 16,500 14, 437, 500 12/31/ 23 940 x 16, 500 = 15, 510, 000 12/ 31/ 24 1, 005 x 16, 500 = 16, 582, 500 7, 500,100 (2) 95,000- 78, 500 = 16, 500 CASH CONTRIBUTION PER PROTOTYPE CASH FLOWS FOR REPLACEMENT AWERUARISES : UNITS CONTRIBUTIONS YEAR SOLD (95,080- 66,000 : 29,00) (b) NETCASH INVESINCUR (1 ) (2) ( 3) = (2) * 29,000 6) AT TERN NORWU ( 4 ) (S) 11.1 18 ( 66, 300,004) 4, 200,000 12/ 301 18 615 x 29,800 17, 835, 005 2/ 31/19 680x 29, 030 = 19 , 720, 000 1213:|20 745 x 29 020 : 21, 605,000 12/30/21 810 * 29, 060 23, 490 000 12 / 3428 875* 39 00) 25, 375, 200 12/31/23 940 x 29, 010 # 27 260, AND 12/30/ 24 1, 005 8 29, 00 * 29, 145 , 1:) 16, 450 , 080 95,000-66, 000 = 29, 000 CASH CONTRIBUTIONS PER PROTOTYPECHAPTER 21 : CAPITAL BUDGCHING 1 : 21- 34 ( 2) CALCULATE THE PAYBACK PERIOD FOR ME MODERNIZE AND REPLACE ALTERNATIVES 2. PAYBACK PERIOD CALCULATIONS FOR MODERNIZING ALTERNANURS : COMULANVE MET INInAL YEAR CASA INFLOWS CASH INFLING INVESTMENT : (2) (3) (4) 11.1 18 35, 304, 090 12/ 31/18 10 147, 500 10, 147, 500 . 25, 152, 500 12/81/ 19 11 220, 600 21 367,500 13, 932, 500 12 / 31 / 20 12 292 500 33, 660, 030 1, 640, OOD 12/31 / 21 13, 365, 105 40 , 725, DOD 0 PAYBACK = 3 + ( 1, 640 , 060 ; 13, 365, 000 ) = + 0 . 12 271 = 3 . 1 2 271 OR 3 . 12 YEARS 2. PASSICE PRONO CALCULROLE FOR REPLACE ALTERNATIVE. INVESTMENT : CASHINFLOWS CASHINFLOWS UNRELAVERED AP COD OFYEAR (1 ) (3) (3) (4 ) (6, 300,000-4, 200,060) 62, 100,000 12/ 31/ 18 17, 835 090 17, 835, 809 44, 265, 000 12131 / 19 19, 720, 090 24 545,BOD 12/ /21/ 20 21, 605, DOD 59, 160, 020 2, 9 40 , 800 12/31 /21 23 , 490, 020 82, 650, 045 PAY BACK = 3 + ( 2 , 940, 000 / 23, 490, 000) 3 + 0. 12 5 14 : 3. 12516 OR 3 . 13 Peace .CHATTER 21 : CAPITAL BISECTING Itw: 21- 34 (3) CALCULATE NET PRESENT VALUE OF NIC MODERNIZE AND REPLACE ALTERNATIVES . PV DISC NET CASH PRESENT YEAR FACTOR 14%% FLOW VALUE (35, 300,000 ) 35, 300, 000 12 / 3:408 0.877 10, 147, 500 8, 849, 358 1201/19 0.769 14. 220,000 8, 628, 180 13/31/ 20 0.675 12, 292, 500 8, 297 438 12/31/ 21 0.592 13, 365, 000 7, 912, 080 57 955 679 12/31/32 0.519 14, 437, 500 7,493, 063 12/31/23 0. 456 15. 510, DUO 7, 092, 560 12/31/39 0.400 24, 082, 500 9, 633,000 22, 635, 679 MODERNIZE ALICENANUE PV DOSE U Ci CASH PRESEUr YEAR Facsee 14%. FLOW VALUE 1.00 (62, 100, 000) ( 62, 140,000) 0.877 17. 838,000 15, 641, 295 0.768 19 730, 000 15, 164, 680 12 /35 / 20 0.675 20, 605, 000 14, 583, 375 0.592 23, 490, 000 13, 906, 080 102, 953; 615 62/30/23 0.515 25 375, 080 15, 169, 628 12/20/ 23 0.456 27, 260,200 12, 430, 560 12 /30 / 24 0.408 45, 145,000 ? 18 058, 020 40 , 853, 615CHAPTER 21: CAPITAL BUDGETAL Itw: 21-34 (4) WHAT FACTORS SHOULD DUBLIN CHIPS CONSIDER IN CHISOSING BORDEN TIC AL TRNATIVES . USING THE PAYBACK PERIOD, ME MODERNIZE ALTERNATIVE IS PREFERRED, ALBEIT BY A VERY SLIGHT MARGIN, TO THE REPLACE ALTERNATIVE. ON THE OTHER HAND, THE REPLACE ALTERNATIVE HAS A SIGNIFICANTLY HIGHER NOV THAN THE MOOCRAZE ALTERNATIVE AND SO SHOULD OC PREFERRED. OF COURSE, MIC UPV AMOUNTS ALE BASCO ON BEST ESTIMATES OF CASH FLOWS GOING OUT INTO THE FUTURE. DUBLIN CHIPS SHOULD EXAMINE THE SENSITIVITY OF THE NPV AMOUNTS TO VARIATIONS IN ME ESTIMATES. NONFINANCIAL QUALITATIVE FACTORS SHOULD ALSO BE CONSIDERED. THESE COULD INCLUDE THE QUALITY OF THE PROTOTYPES PRODUCED BY NIC MODERNRE AND REPLACE ALTERNATIVES. THESE ALITEVADUES HAY DIFFER IN CAPACITY AND DECIR ABILITY TO MEET SURGES IN DENAND BEYOND THE ESTIMATED AMOUNTS. THE ALITONATIVES MAY ALSO DIFFER IN HOW WORKERS INCREASE PIEIR SHOP FLOOR - CAPABILITIES. SUCH DIFFERENCES COULD PROVIDE LABOR FORCE EXTERNALITIES THAT CAN BC THE SOURCE OF FUTURE BENEFITS TO DUBLIN CHIPS