Monette Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $905,000. Projected net cash inflows are as follows: E: (Click the icon to view the projected net cash inflows.) (Click the icon to view the present (Click the icon to view the present value table.) value annuity table.) (Click the icon to view the future (Click the icon to view the future value table.) value annuity table.) Read the requirements. Requirement 1. Compute this project's NPV using Monette Industries' 16% hurdle rate. Should Monette Industries invest in the equipment? Why or why not? Begin by computing the project's NPV (net present value). (Round your answer to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) Net present value $ Year 1 Year 2 Year 3 Year 4........ Year 5 $265,000 $253,000 $224,000 $213,000 $204,000 $174,000 Year 6.............. 1. Compute this project's NPV using Monette Industries' 16% hurdle rate. Should the company invest in the equipment? Why or why not? 2. Monette Industries could refurbish the equipment at the end of six years for $103,000. The refurbished equipment could be used one more year, providing $78,000 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 Monette 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.) Periods 1% 2% 0.961 0.924 0.951 0.906 0.942 0.888 0.933 0.871 0.923 0.853 0.914 0.837 0.905 0.820 0.896 0.804 0.887 0.788 0.879 0.773 0.870 0.758 0.861 0.743 0.820 0.673 0.780 0.610 0.742 | 0.552 0.672 0.453 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.554 0.478 0.412 0.307 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 0.601 0.577 0.555 0.456 0.375 0.308 0.208 Present Value of $1 5% 6% 8% 10% 12% 14% 16% 18% 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.907 0.890 0.857 0.769 0.743 0.718 0.864 0.840 0.794 0.751 0.712 0.675 0.641 | 0.609 0.823 0.792 0.735 0.683 0.636 0.592 0.5520.516 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.711 0.665 0.583 | 0.513 0.452 0.400 0.354 0.314 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 | 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.505 0.442 | 0.340 0.263 | 0.205 0.160 0.125 0.099 0.481 0.417 0.315 0.239 0.183 0.140 | 0.108 0.084 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 | 0.231 0.174 0.099 0.057 0.033 0.0200.0120.007 0.142 0.097 0.046 0.022 0.0110.005 0.003 0.001 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.026 0.010 0.004 0.001 Future Value of $1 Periods 2% 1.020 1.040 1.061 1.082 1.104 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.220 10% 1.100 1.210 1.331 1.464 1.611 3% 1.030 1.061 1.093 1.126 1.159 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 1.806 2.094 2.427 3.262 4% 1.040 1.082 1.125 1.170 1.217 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 6% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 2.653 3.386 4.322 7.040 8% 1.080 1.166 1.260 1.360 1.469 1.587 1.714 1.851 1.999 2.159 1.126 1.149 1.172 1.195 1.219 14% 1.140 1.300 1.482 1.689 1.925 2.195 2.502 2.853 3.252 3.707 12% 1.120 1.254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 9.646 17.000 29.960 93.051 1.772 1.949 2.144 2.358 2.594 2.853 16% 1.160 1.346 1.561 1.811 2.100 2.436 2.826 3.278 3.803 4.411 5.117 5.936 6.886 7.988 9.266 19.461 40.874 85.850 378.721 20% 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 18% 1.180 1.392 1.643 1.939 2.288 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 27.393 62.669 143.371 750.378 2.332 2.518 3.138 2.720 1.243 1.268 1.294 1.319 1.346 1.486 1.641 1.811 2.208 1.898 2.012 2.133 2.261 2.397 3.207 4.292 5.743 10.286 4.226 4.818 5.492 6.261 7.138 2.937 3.172 4.661 6.848 10.063 21.725 7.430 8.916 10.699 12.839 15.407 38.338 95.396 237.376 1,469.772 3.452 3.797 4.177 6.727 10.835 17.449 45.259 2.191 2.666 3.243 4,801 1.282 13.743 26.462 50.950 188.884 1.348 1.489 Periods 4.968 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 12.134 13.004 13.865 18.046 22.023 25.808 32.835 Present Value of Annuity of $1 2% 3% 4% 5% 6% 8% 10% 12% 0.980 0.971 0.962 0.952 0.943 | 0.926 0.909 0.893 1.942 1.913 1.886 1.859 1.833 1.783 1.736 | 1.690 2.884 2.829 | 2.775 2.723 2.673 2.577 2.487 2.402 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 7.325 7.020 6.733 6.463 6.210 5.747 5.335 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 9.787 9.2538.760 8.306 7.887 7.139 6.495 5.938 10.575 9.954 9.3858.863 8.384 7.536 6.814 6.194 11.348 10.635 9.986 | 9.394 8.853 7.904 7.103 6.424 12.106 11.296 10.563 9.899 9.295 8.244 7.367 | 6.628 12.849 11.938 11.118 10.380 9.7128.559 7.606 6.811 16.351 14.877 13.590 12.462 | 11.470 9.818 8.514 7.469 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 22.396 19.600 17.292 | 15.372 13.765 11.258 9.4278.055 27.355 23.115 19.793 17.159 15.046 11.925 9.7798.244 14% 16% 18% 20% | 0.877 0.862 0.847 0.833 1.647 1.605 1.566 1.528 2.322 | 2.246 2.174 | 2.106 2.914 2.798 2.690 2.589 3.433 3.274 3.127 | 2.991 3.889 3.685 3.498 | 3.326 4.288 4.039 | 3.812 3.605 4.639 4.344 | 4.078 3.837 4.946 4.607 4.303 4.031 5.216 4.833 4.494 4.192 5.453 5.029 4.656 4.327 5.660 5.1974.793 4.439 5.842 5.3424.910 4.533 6.002 5.468 5.008 4.611 6.142 5.575 5.092 4.675 6.623 5.9295.353 | 4.870 6.8736.097 5.467 | 4.948 7.003 6.177 5.517 4.979 7.105 6.233 5.548 4.997 Periods 2 123456789m2 18 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.462 11.567 12.683 13.809 14.947 16.097 22.019 28.243 34.785 48.886 1.000 2.020 3.060 4.122 5.204 6.308 7.434 8.583 9.755 10.950 12.169 13.412 14.680 15.974 17.293 24.297 32.030 40.568 60.402 38 1.000 2.030 3.091 4.184 5.309 6.468 7.662 8.892 10.159 11.464 12.808 14.192 15.618 17.086 18.599 26.870 36.459 47.575 75.401 | Future Value of Annuity of $1 | 48 58 68 10% 128 | 14% | 15% | 18% | 20% 1.000 1.000 1.000 11.000 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 4.246 4.310 4.375 4.506 4.641 4.79 4.921 5.066 5.215 5.368 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.87 7.154 7.442 6.633 6.802 6.975 7.336 7716 8.115 8.536 8.97 9.442 9.930 7.898 8.142 8.394 8.923 9.487 10.089 10.730 11.414 12.142 12.916 9214 9.549 9.897 10.637 11.436 12.300 13.233 14.240 15.327 16.499 10.583 1.027 1.491 12.488 13.579 14.776 16.085 17.519 19.086 20.79 12.006 12.578 13.181 14.487 15.937 17.549 19.337 21.321 23.521 25.959 13.486 14.207 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 15.026 15.917 16.870 18.977 21.384 24.133 27.271 30.850 34.931 39.581 16.627 17.713 18.882 21.495 24.523 28.029 32.089 36.786 42.219 48.497 18.292 19.599 21.015 24.215 27.975 32.393 37.581 43.672 50.818 59.196 20.024 21.579 23.276 27.152 31.772 37.280 43.842 51.660 | 60.965 72.035 29.778 33.066 36.786 45.762 57.275 72.052 91.025 115.380 146.628 186.688 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 56.085 66.439 79.058 13.283 164.494 241.333 356.787 | 530.312 | 790.948 | 1,181.882 95.026 | 120.800 | | 154.762 259.057 42.593 | 767.091 |1,342.025 | 2,360.757 | 4.163.213 | 7,343.858