Lukow Products is investigating the purchase of a piece of automated equipment that will save $120,000 each year in direct labor and Inventory carrying costs. This equipment costs $770,000 and is expected to have a 5-year useful life with no salvage value. The company's required rate of return is 9% on all equipment purchases. Management anticipates that this equipment will provide intangible benefits such as greater flexibility and higher-quality output that will result in additional future cash inflows. Click here to view Exhibit 7B-1 and Exhibit 7B-2 to determine the appropriate discount factor(s) using table. Required: 1. What is the net present value of the piece of equipment before considering its intangible benefits? Note: Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount. 2. What minimum dollar value per year must be provided by the equipment's intangible benefits to justify the $770,000 investment? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount. 1 Net present value 2. Minimum dollar value EXHIBIT 7B-1 Present Value of $1, 1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 1 0.962 0952 0.943 0935 0926 0.917 0909 0901 0.893 2 0925 0.907 0.890 0873 0.857 0.842 0.826 0.812 3 0889 0.864 0 840 0.816 0794 0.772 0.751 0.731 4 0855 0823 0.792 0.763 0.735 0708 0.683 0.659 3 0822 0.784 0747 0.713 0681 6 0.790 0.746 0.705 0.666 0630 0.650 0621 0.593 0.596 0.564 7 0.760 0711 0665 0623 0.583 0.547 0.513 8 0731 0677 0627 0582 0540 0.502 0467 9 0.703 0.645 0592 0.544 0.500 0 460 0424 10 0.676 0614 0.558 0508 0.463 0422 0 386 0352 11 0650 0.585 0.527 0475 0429 0388 0350 0.317 12 0.625 0.557 0497 0444 0 397 0.356 13 0 601 0530 0469 0.415 0 368 0.326 14 0377 0.505 0442 0388 0.340 15 16 17 19 0.250 0212 0180 0.153 0130 0111 0475 0396 0331 0277 0232 0194 0 164 0138 0.116 0098 20 21 19% 17% 18% 25% 16% 15% 0.885 0877 0870 0862 0.855 0847 0.840 0833 0826 0.820 0.813 0.806 0.800 0.640 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0694 0.683 0.672 0.661 0.650 0.797 0.593 0579 0.564 0551 0537 0524 0512 0.712 0693 0675 0.658 0641 0624 0.609 0.410 0.636 0.613 0.592 0572 0.552 0.534 0.516 0.499 0.482 0.467 0451 0437 0.423 0543 0519 0.497 0.476 0.456 0437 0419 0.402 0.386 0370 0.355 0341 0.328 0.567 0.535 0507 0480 0456 0432 0.410 0.390 0.370 0.352 0.335 0319 0.303 0289 0.275 0262 0482 0.452 0.425 0 400 0.376 0354 0.333 0.314 0.296 0.279 0.263 0.249 0235 0.222 0.210 0.285 0.266 0.249 0233 0218 0.204 0191 0179 0.168 0.434 0.404 0376 0351 0327 0305 0.391 0361 0333 0.308 0284 0.263 0.243 0.225 0209 0.194 0180 0167 0155 0144 0134 0176 0.162 0149 0137 0126 0116 0107 0322 0.295 0.270 0247 0.227 0.208 0191 0148 0.135 0123 0.112 0.103 0094 0.086 0.287 0261 0237 0215 0195 0178 0162 0319 0.286 0257 0231 0208 0187 0.168 0152 0137 0.124 0112 0.102 0.092 0083 0.076 0069 0.163 0145 0130 0116 0104 0093 0.084 0.075 0068 0 061 0055 0290 0258 0229 0204 0182 0088 0.078 0069 0062 0055 0049 0.044 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0125 0111 0099 0040 0035 0.209 0555 0481 0417 0362 0315 0.275 0.239 018 0.160 0.140 0123 0.108 0095 0084 0074 0065 0057 0.051 0.045 0.081 0.071 0062 0054 0047 0042 0016 0032 0028 0534 0458 0394 0.339 0292 0252 0218 0188 0163 0141 0.123 0107 0.093 0.045 0039 0034 0030 0026 0023 0513 0.436 0371 0317 0270 0231 0198 0.170 0146 0.125 0108 0093 0080 0.069 0060 0052 0024 0.021 0018 0095 0081 0069 0059 0051 0044 0.038 0032 0028 18 0494 0416 0350 0.296 0083 0070 0.060 0051 0043 0037 0031 0027 0023 0020 0017 0014 0037 0011 0026 0022 0019 0016 0014 0012 0.456 0377 0312 0258 0215 0178 0149 0124 0.104 0087 0073 0061 0051 0043 0015 0013 0011 0.009 0439 0359 0294 0242 0199 0164 0135 0.112 0093 0077 0.064 0053 0044 0037 0031 0026 0.022 0.018 20% 21% 22% 23% 24% 22 0422 0342 0.278 0226 0184 0150 0123 0101 0.083 0065 0056 0.046 0038 23 24 26 0.004 0032 0026 0022 0018 0015 0013 0011 0009 0007 0.406 0326 0262 0211 0170 0138 0112 0 091 0074 0060 0049 0040 0033 0027 0022 0015 0015 0012 0010 0009 00070006 0390 0310 0247 0197 0158 0126 0102 0082 0066 0053 0043 0035 0028 0023 0019 0015 00110010 000 0007 0006 0.005 25 0375 0295 0233 0184 0146 0116 0092 0.074 0.059 0017 0015 0030 0024 0.020 0016 0013 0010 0009 0007 0006 0.005 0361 0281 0220 0172 0135 0106 0084 0066 0053 0042 0.033 0026 0021 0017 0014 0011 00090007 00060005 0004 0.003 0006 0005000400030002 0347 0268 0207 0161 0125 009 0076 0060 0.047 0037 0029 0023 0015 0014 00110009 0.007 0.00) 0.002 0.002 0333 0255 0196 0150 0116 00900069 0.054 0.042 0033 0026 0020 0016 0012 0010 0008 0006 00050004 0004 000 0002 0002 0002 0321 0243 0185 01410107 008 0063 0048 0037 0029 0022 0017 0014 0.011 0.008 0006 0.005 0005 0004 0003 0003 0002 0002 0001 0308 0231 0124 0131 0099 0.075 0057 0044 0033 0026 0020 0015 0012 0.000 0007 0.001 0.001 0.000 0000 0000 0000 0000 27 28 29 30 40 0208 0142 0097 0067 0046 0032 0022 0015 0011 0.0080 005 0004 0003 0.0020 001 EXHIBIT 7B-2 Present Value of an Annuity of $1 in Arrears, Periods 4% 5% 6% 1 0.962 0.952 0943 7% 0.935 9% 10% 11% 2 1.886 1.859 1.833 1 808 3 2.775 2.723 2.673 2.624 2.577 2.531 2487 2444 5% 12% 13% 14% 0926 0.917 0909 0.901 0.893 0.885 0877 1783 1.759 1.736 1.713 1.690 1668 1.647 2.402 2.361 2,322 15% 4 3.630 3546 3.465 3 387 5 4.452 4.329 4.212 4.100 3312 3.993 6 5242 5.076 4.917 4.767 7 6.002 5.786 5582 5 389 S 6.733 6.463 6.210 5.971 9 7435 7.108 10 8111 7722 7360 6.145 5.889 5.650 5426 5.216 11 8.760 $306 7.887 7.499 7139 6.805 6.495 12 9.385 8.863 8.384 7.943 7536 7161 6814 6.194 6 207 5.938 5687 5.453 6.492 5918 5 660 13 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6750 6.424 6 122 5 842 14 10 563 9899 9 295 8.745 6628 6302 6.002 15 11.118 10.380 9.712 9.108 6 811 6 462 16 11.652 10 838 10 106 17 12. 166 11 274 10.477 13 19 20 9.447 9.763 12.659 11.690 10 828 10 059 13.134 12.085 11.158 10.336 13 590 12 462 11.470 10 594 6.974 9.129 21 14.029 12.821 11 764 22 14.451 13.163 12 042 11 061 9.292 9442 23. 14.857 13.489 12.303 11.272 24 15.247 13.799 12 550 11 469 10 529 9 707 25 15.622 14 094 12.783 11 654 10.675 9823 26 15.983 14.375 13 003 11 826 10.810 9929 27 16 330 14 643 13 211 11 987 10 935 10.027 9.237 28 16 663 14 898 13.406 12 137 11 051 10.116 9.307 29 16 984 15.141 13 591 12.278 11 158 30 17 292 15 372 13 765 12 409 40 19.793 17 159 15 046 13.332 17% 18% 19% 20% 0.870 0.862 0.855 0.847 0.840 0.833 1 626 1.605 1.585 1566 1.547 1.528 1.509 2.283 2.246 2.210 2174 2.140 2106 2.074 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2589 2.540 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3058 2.991 4.623 4.486 4.355 4.231 4.111 3998 3.889 3.784 3685 3.589 3498 3.410 3.326 3.245 5 206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4039 3.922 3.812 3.706 3 605 3.508 3.416 3.327 3.242 3.161 5.747 5.535 5335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3619 3518 3421 3329 6.802 6515 6.247 5.995 5.759 5.537 5.328 5132 4.946 4.772 4.607 4.451 4.303 4.163 4031 3.905 3.786 7.024 6.710 6418 3.673 3:566 3.463 5.019 4.833 4.659 4.494 4.339 4 192 4.054 3.923 3799 3.682 3571 5.234 5.029 4.836 4.656 4.486 4327 4.177 4035 3.902 3.776 3.656 5.421 5 197 4.988 4.793 4611 4.439 4.278 4.127 3.985 3.851 3.725 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4 203 4.053 3.912 3.780 8.244 7.786 7.367 6982 5 724 5.468 5.229 5.008 4.802 4 611 4432 4.265 4 108 3.962 3824 8.559 061 7.606 7.191 6142 5.847 5.575 5324 5092 4.876 4675 4.489 4315 4153 4.001 3859 8.851 8313 724 7379 6.604 6 265 5.954 5.668 5.405 5162 4938 4.730 4.536 4.357 4.189 4033 3.887 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4576 4.391 4.219 4.059 3910 9372 8756 8.201 7.702 7.250 6840 6.467 6.123 5.818 5534 5273 5.033 9.604 4.812 4608 4419 4243 4.080 3.928 8.950 8.365 7.839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5070 4.843 4.635 4.442 4.263 4.097 3942 9818 8514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 4.110 3.954 10.836 | 10.017 8.649 8.075 7562 7.102 6687 6.312 5973 5.665 5.384 5.127 4891 10 201 8772 8176 7645 7.170 6.743 6359 6011 4.675 4476 4.292 4.121 3.963 10.371 9580 5.696 5.410 5149 4909 4690 4.488 4.302 4.130 3.970 8.883 8.266 7718 7.230 6.792 6399 6044 5.723 5.432 5.167 4925 4.703 4.499 4311 4.137 3.976 8.985 3348 7.784 728 6.835 6434 6073 5.746 5451 5182 4937 4.713 4.507 4.318 4:143 3.981 9.077 422 7.843 7.310 6873 6 464 6097 5.766 5.467 5.195 4.948 9 161 488 7896 7.372 6906 6.491 4.721 4.514 4.323 4147 3.985 6.118 5.783 5.480 5.206 4.956 4.728 | 4520 4.328 4.151 3988 548 7.943 7409 6935 6.514 6136 5.798 5492 5215 4.964 4.734 4 524 4.332 4154 3.990 602 7.994 7.441 6.961 6534 6152 5810 5.502 5223 4970 4.739 4.528 4335 4.157 3992 10 198 9.370 8650 8.022 7470 6983 6 5516166 5820 5510 5229 4.975 4.743 4.531 4337 4.159 3994 11 258 10.274 9427 8 694 8.055 7496 7003 6566 6.177 5829 5517 5235 4.979 4.746 4534 4339 4160 3.995 11 925 10.757 9.779 8951 244 7.634 7105 6642 6233 5.871 5.548 5.258 4997 4.760 4.544 4347 4166 3.999 16% 21% 22% 23% 24% 2.926 25% 0.826 0.820 0.813 0.806 0.800 1492 1474 1.457 1.440 2042 2011 1981 1952 2.494 2.448 2.404 2.362 2 864 2 803 2.745 2.689 3.167 3.092 3.020 2.951