i Requirements 1. Compute this project's NPV using Walker Industries' 14% hurdle rate. Should the company invest in the equipment? Why or why not? 2. Walker Industries could refurbish the equipment at the end of six years for $105,000. The refurbished equipment could be used one more year, providing $72,000 of net cash inflows in Year 7. In addition, the refurbished equipment would have a $55,000 residual value at the end of Year 7. Should Walker Industries invest in the equipment and refurbish it after six years? Why or why not? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Print Done * Data Table Year 1................. Year 2....... Year 3........ Year 4........ Year 5..... Year 6...... $262,000 $255,000 $224,000 $210,000 $204,000 $173,000 Print Done ( Reference Periods 1% 0.990 0.980 12% 0.893 0.797 0.712 0.636 0.971 0.567 OVO AWN 2% 3% 0.980 0.971 0.961 0.943 0.942 0.915 0.9240.888 0.906 0.863 0.888 0.837 0.871 0.813 0.853 0.789 0.837 0.766 0.820 0.744 0.804 0.722 0.788 0.701 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 Present Value of $1 5% 6% 8% 10% 0.952 0.943 0.926 0.909 0.907 0.890 0.8570.826 0.864 0.840 0.794 0.751 0.823 0.792 0.735 0.683 0.784 0.747 0.681 0.621 0.746 0.705 0.630 0.564 0.711 0.665 0.583 0.513 0.677 0.627 0.540 0.467 0.645 0.592 0.500 0.424 0.614 0.558 0.463 0.386 0.585 0.429 0.350 0.557 0.497 0.397 0.319 0.400 16% 18% 20% 0.862 0.847 0.833 0.743 0.7180.694 0.641 0.609 0.579 0.5520.516 0.482 0.476 0.437 0.402 0.410 0.370 0.335 0.354 0.314 0.279 0.305 0.266 0.233 0.263 0.225 0.194 0.227 0.191 0.162 0.1950.162 0.135 0.168 0.137 0.112 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.351 0.308 0.270 10 0.527 12 0.237 0.208 S Print Print Done Done i Reference Periods 14% 1.140 1.300 1.482 1.689 OVO AWN- 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 2% 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 1.243 1288 3% 1.030 1.061 1.093 1.126 1.159 1.194 1.230 1.267 1.305 1.344 1.384 1426 4% 1.040 1.082 1.125 1.170 1.217 1.265 1.316 1.369 1.423 1.480 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1796 12% 1.120 1.254 1.405 1.574 1.762 1.974 Future Value of $1 6% 8% 1.060 1.080 1.124 1.166 1.191 1.260 1.262 1.360 1.338 1.469 1.419 1.587 1.504 1.714 1.594 1.689 1.999 1.791 2.159 1.898 2.332 2012 2518 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.358 2.594 2.853 2138 2.211 1.851 2.476 2.773 1.925 2.195 2.502 2.853 3.252 3.707 4.226 1818 now WNNN 3.106 1.116 1 127 1.539 1901 3.479 T3 806 Print Done Reference Periods 2% 0.980 1.942 2.884 3% 0.971 1.913 2.829 3.717 4.580 4% 0.962 1.886 2.775 3.630 4.452 18% 0.847 1.566 16% 0.862 1.605 2.246 2.798 3.274 2.174 3.808 1% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 4.713 Present Value of Annuity of $1 5% 6% 8% 10% 0.952 0.943 0.926 0.909 1.859 1.833 1.783 1.736 2.723 2.673 2.577 2.487 3.546 3.465 3.312 3.170 4.329 4.212 3.993 3.791 5.076 4.917 4.623 4.355 5.786 5.582 5.206 4.868 6.463 6.210 5.747 5.335 7.108 6.802 6.247 5.759 7.722 7.360 6.710 6.145 8.306 7.887 7.139 6.495 8.863 8.384 7.536 6.814 14% 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 5.601 6.472 7.325 8.162 8.983 9.787 10.575 3.685 5.417 6.230 7.020 7.786 8.530 9.253 9.954 5.242 6.002 6.733 7.435 8.111 8.760 9.385 2.690 3.127 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.946 10 4.039 4.344 4.607 4.833 5.029 5.197 5.216 5.453 5.660 4.327 4.439 Print Done i Reference Periods 1% 14% WN + 6.105 2% 1.000 1.000 2.010 2.020 3.030 3.060 4.060 4.122 5.101 5.204 6.152 6.308 7.214 7.434 8.286 8.583 9.369 9.755 10.462 10.950 11.567 12.169 12 682 13.412 OVO 3% 1.000 2.030 3.091 4.184 5.309 6.468 7.662 8.892 10.159 11.464 12.808 14 102 4% 1.000 2.040 3.122 4.246 5.416 6.633 7.898 9.214 10.583 12.006 13.486 15 026 Future Value of Annuity of $1 5% 6% 8% 10% 1.000 1.000 1.000 1.000 2.050 2.060 2.080 2.100 3.153 3.184 3.246 3.310 4.310 4.375 4.506 4.641 5.526 5.637 5.867 6.802 6.975 7.336 7.716 8.142 8.394 8.923 9.487 9.549 9.897 10.637 11.436 11.027 11.491 12.488 13.579 12.578 13.181 14.487 15.937 14.207 14.972 16.645 18.531 15017 | 16 870 | 18 077 | 21 281 12% 1.000 1.000 2.120 2.140 3.374 3.440 4.779 4.921 6.353 6.610 8.115 8.536 10.089 10.730 12.300 13.233 14.776 16.085 17.549 19.337 20.655 23.045 21 122 | 27 271 SN NO WN- o | | Print Done