lkoo Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $920,000. Projected net cash inflows are as follows EEE (Click the icon to view the projected net cash inflows.) (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1, Compute this project's NPV using ikoo's 14% hurdle rate. Should ikoo invest in the equipment? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, XXxX. Use parentheses or a minus sign for a negative net present value.) PV Data Table Net Cash Factor Present Requirements Years Inflow (114%) Value Present value of each year's inflow Year I. Compute this project's NPV using ikoo's 14% hurdle 1 $262,000 2 255,000 3 227,000 4 215,000 5 205,000 6 177,000 rate. Should Ikco invest in the equipment? 2. Ikoo could refurbish the equipment at the end of sik years for $103,000. The refurbished equipment could be used one more year, providing $74,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $50,000 residual value at the end of year 7. Should Ikoo invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) 3 (n 3) Year Year 5 (n 5) 6 (n 6) Total PV of cash inflows 0 Initial investment Net present value of the project Print Done Print Done lkoo Industries invest in the equipment. Requirement 2. Ikoo could refurbish the equipment at the end of slx years for $103,000. The refurbished equipment could be used one more year, providing $74,000 of net cash inflows in year 7. Additionally, the refurbished equipment would ha a $50,000 residual value at the end of year 7. Should lkoo invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Calculate the NPV of the refurbishment. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for cash outilows and for a negative net present value.) Cash PV Factor Present Value (outflow)/inflow (.14%) Refurbishment at the end of Year Cash inflows in Year 7 (n-7) Residual value (n7) Net present value of the The refurbishment provides aNPV. The refurbishment NPV is investment. to overcome the original NPV of the equipment. Therefore, the refurbishment | alter lk00 Industries' original decision regarding the equipment 1Reference Present Value of Ordinary Annuity of $1 Periods 1 % | 2% | 3% | 4% | 5% | 6% | 7% | 8% | 9% | 10% | 12%, 14% | 15% | 16%| 18%, 20% | |0.990 | 0.980 | 0.971 10.962 | 0.952 | 0.943 | 0.935 | 0.926 | 0.917|0.909|0.893|0.877|08700.8620.847|0.833 2 1.9701.942 1.913 1.886 1.8591.833 1.808 1.7831.7591.7361.6901.6471.6261.6051.5661.528 2.941 2.884 2.8292.775 2.723 2.673 2.6242.577 2.531 2.4872.4022.3222.2832.2462.1742.106 4 3.902 3.808 3.717 |3.630 3.546 3.465 3.387 3.312 3.240 3.1703.0372.9142.8552.7982.69012.589 54.8534.713 4.5804.4524.329 4.2124.100 3.993 3.890 3.7913.6053.4333.3523.2743.1272.991 6 5.7955.601 5.417 5.242 5.0764.917 4.767 4.6234.486 4.3554.111 3.8893.7843.6853.4983.326 7 6.728 6.472 6.230 6.002 5.786 5.5825.3895.206 5.033 14.8684.5644.2884.1604.03913.8123.605 652 7.325 7.0206.7336.463 6.210 5.9715.747 5.5355.3354.9684.6394.4874.3444.078 3.837 98.5668.162 7.7867.435 7.1086.802 6.5156.247 5.995 5.7595.3284.9464.7724.6074.3034.031 10 9.471 8.9838.530 8.111 7.722 7.3607.0246.710 6.4186.1455.6505.2165.0194.8334.4944.192 11 10.3689.7879.2538.7608.3067.8877.49917.139 6.805 6.4955.9385.4535.2345.0294.6564.327 1211.25510.5759.9549.385 8.8638.3847.943 7.5367.161 6.8146.1945.6605.4215.1974.7934.439 13 12.13411.34810.6359.9869.3948.8538.3587.904 7.487 7.1036.4245.8425.5835.3424.9104.533 14 13.0041210gr 1.296|10.563 9.899 | 9.295 | 8.745 | 8.244 | 7.786|735766286.00257245.4685.008|4611 15 13.86512.84911.93811.118/10.380 9.7129.108 8.559 8.061 7.6066.8116.1425.8475.5755.0924.675 16 14.71813.57812.561 11.65210.83810.106 9.447 8.851 8.313 7.8246.9746.2655.9545.6695.16214.730 17 115.56214.2921 3.16012166|11.274|10.47 9.763 | 9. 1228.544 8.0227.120163736047574952224775 18 16.39814.99213.75412.65911.69010.82810.0599.372 8.7568.2017.2506.4676.1285.8185.2734.812 19 17.22615.67814.32413.13412.08511.15810.336 9.6048.950 8.3657.3666.55016.1985.8775.3164.844 20 18.04616.35114.87713.59012.46211.47010.5949.818 9.129 8.5147.4696.6236.2595.9295.3534.870 21 18.85717.01115.41514.02912.821 11.76410.83610.017|9.2928.6497.56216.6876.3125.9735.3844.891 22 19.66017.65815.93714.45113.16312.04211.061 10.2019.442 8.7727.6456.7436.3596.0115.4104.90 23 20.45618.29216.44414.85713.48912.30311.27210.371 9.580 8.8837.7186.7926.3996.0445.4324.925 24 21.24318.914|16.936|15.2471 3.799|12.550|11.469|10.529 9707 8.9857.7846.835|6.434607354514.937 22.02319.52317.41315.62214.09412.78311.65410.6759.8239.0777.8436.8736.4646.0975.4674.948 26 22.795% .1211 7.877|15.983|14.3751 3.0031 1.826|10.810| 9.929|9.1617.8966.906|6.4916. 1 185.4804.956 27 23.560 .7071 8.3271 6.330|14.6431 3.211|11.98710.935|10.0279.23779436.9356.514613654924964 28 24.31621.281|18.7641 6.66314.898|1 3.40612137|11.05110.1169.3077.9846.9616.534615255024970 25.06621.84419.18816.984115.14113.59112.27811.15810.1989.3708.0226.9836.5516.1665.5104.975 30 25.80822.39619.600117.29215.37213.76512.40911.25810.2749.4278.0557.0036.5666.1775.5174.979 40 32.8352735523.1151 9.79317.1591 5046|1 3.33211.925|10.7579.7798.24471056642|623355484997 50 39.19631.42425.73021.48218.25615.76213.801 12.23310.9629.9158.3047.1336.6616.2465.5544.999 Print Done 1Reference Present Value of $1 3 Periode 1% | 2% | 3% | 4% | 5% | 6% | 7% | 8% | 9% | 10% | 12% | 14% | 15% | 16% | 18%| 20% 1 0.9900.980 0.9710.962 0.952 0.943 0.9350.9260.917 0.9090.893 0.8770.870 0.862 0.847 0.833 2 |0.980|0.961|0.943|0.925|0.907|0.890|0873|0.857|0842|0826|0797|0769|0756|0743|0718|0.694 3 0.971 0.9420.9150.889 0.864|0.840 0.816 0.794 0.7720.7510.712 0.675 0.658 0.641 0.6090.579 4 0.9610.924|0.8880.855 0.823 0.792 0.763 0.735 0.708 0.683 0.636 0.5920.572 0.5520.516 0.482 50.951 0.9060.8630.822 0.784 0.747 0.713 0.681 0.6500.621 0.567 0.519 0.497 0.4760.4370.402 6 0.9420.88810.837 l0.79010.746 0.70510.66610.630 0.59610.56410.50710.45610.4321041010.37010.335 7 |0.93310.871|0.813|0.760 | 0.71110665|0623|0.583|0.547|0.513|0.452|0.400 |0.376|0.354|0.314|0.279 8 0.9230.8530.789 0.7310.677 0.627 0.5820.540 |0.502 0.467 0.404 0.351 0.3270.305 0.266 0.233 9 0.914|0.837 | 0.766 | 0.703|0.645|0.5920.544 | 0.500|0.460|0.424 | 0.361 10.308 | 0.284 | 0.263 | 0.225 | 0.194 10 0.9050.8200.7440.676 0.614 0.558 0.508 0.463 0.422 0.386 0.322 0.270 0.247 0.2270.191 0.162 11 0.8960.804[0.722 0.6500.585 0.527 0.475 0.429 0.388 0.3500.287 0.237 0.215 0.1950.162 0.135 12 10.8870.788|0.701 10.6250.55704970444|0.397|0.356|0.319|0.257 |0.208|0.187|0.168|0.1370.112 13 0.879 0.7730.6810.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 14 0.87010.758 0.661 10.57710.50510.44210.38810.34010.29910.2630.205 0.16010.1410.12510.09910.078 15 0.861 0.7430.642 0.5550.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.1080.0840.065 16 |0.853|0728|0.623|0.534|0458|0.394 |0.339|0.2920.2520.218|0.163|0123|0.107|0.093|0.071|0.054 17 0.844 0.7140.605 0.513 0.436 0.371 0.317 0.270 0.2310.198 0.146 0.108 0.093 0.0800.060 10.045 18 0.836 0.7000.5870.4940.416 0.350 0.296 0.250 0.212 0.180 0.130 0.095 0.081 0.0690.051 0.038 19 10.828|0.686|0.570|0.475|0.396|0.331 10.277|0.232|0.19410.164|0.1160.083|0.070|0.060|0.043|0.031 20 10.82010.6790.5540456|0.377|0.312|0.258|0.215|0.178 |0.149|0.104|0.073|0.061|0.051 |0.037|0.026 21 10.811|0.660|0.538|0.439|0.359|0.294|0.242 10.199|0.164|0.135|0.093|0.064|0.053 |0.044|0.0310.022 22 0.8030.6470.52210.42210.342/0.278 0.22610.18410.15010.123 0.0830.056 0.046 0.038 10.02610.018 23 0.795 0.634 0.507 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.0740.0490.040 0.033 0.022 0.015 24 0.788 0.622 0.492 0.390 0.310 0.2470.197 0.1580.126 0.102 0.0660.043 0.035 0.028 0.019 0.013 25 0.780 0.610 0.478 0.375 0.295 0.2330.184 0.146 0.116 0.092 0.0590.0380.0300.024 0.016 0.010 26 |0.772 | 0.598 | 0.464|0.361 10.28110.220 | 0.172|0.135 | 0.1 0610.084|0.053 | 0.033 | 0.026 | 0.021|0014|0.009 27 10.764|0.586|0.450|0.347|0.268|0.207|0.161|0.125|0.098 |0.076|0.047|0.029|0.023|0018|0011 .007 28 10.7570.574|0.437|0.333|0.255|0.196|0.1500.11610.090|0.069|00420.026|0.020100160.010|0.006 29 |0.749 | 0.563|0424|0.321|0.243 | 0.185|0.141|0.107 | 0.082|0.063|0.037 | 0.0220.0 1710.014|0.008 | 0.005 30 0.742 0.552 0.412 0.308 0.231 0.1740.131 0.099 0.075 0.057 0.033 0.0200.015 0.0120.007 0.004 40 |0.6720.453|0.307|0.208|0.14210097|00670.046|0.0320.022 | 0.01110.005|0.004|0.003|0.001 10.001 50 0.608 0.37210.228 0.141 0.087 0.054 0.0340.021 0.013/0.009 0.003 0.001 0.001 0.001 Print Done