o Gaynor Manufacturing, Inc. has a marching machine that needs attention Click the icon to view additional Information) Gaynor expects the folowing ret cash inflows from the two options Click the icon to view the cashows) Gaynor este depreciation and requires an annual rum of 10% Click the icon to view Present Value of tab.) Click the icon to view Present Value of Ordinary Annuity of the Click the icon to view Future Value of table) Click the icon to view Future Value of Ordinary Annuity of 51 table) Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of the two options Compute the payrock for both options. Begin by completing the payback cheder Option et et Cash Out Amount invested A Acum 1.500.000 1 2 3 2 Choose from one number in the indendron con tonton (Click the icon to view Future Value of $ of 16% (Click the icon to view Future Value of Or Read the requirements. profitabi i More Info - back sc The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,300,000. If refurbished, Gaynor expects the machine to last another eight years and then have no residual value. Option 2 is to replace the machine at a cost of $2,300,000. A new machine would last 10 years and have no residual value. Print Done = (Click the icon to view Preser i Data Table ew Preser w Future w Future V. Year Refurbish Current Purchase New Machine Machine lex of the 1 $ 220,000 $ 1,450,000 e for Op 2 560,000 630,000 3 440,000 510,000 4 320,000 390,000 5 270,000 200,000 200,000 6 7 200,000 8 200,000 270,000 270,000 270,000 270,000 270,000 10 $ Total 2,340,000 $ 4,600,000 Print Done ontinue to the next question. Reference Present Value of $1 it 1 7% 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 0.630 0.583 0.540 0.500 0.463 Periods 1% 2% 3% 4% 5% 6% 0.990 0.980 0.971 0.962 0.952 0.943 2 0.980 0.961 0.943 0.925 0.9070.890 3 0.971 0.942 0.915 0.889 0.864 0.840 4 0.961 0.924 0.888 0.855 0.823 0.792 5 0.951 0.906 0.863 0.822 0.784 0.747 6 0.942 0.888 0.837 0.790 0.746 0.705 7 0.933 0.871 0.813 0.760 0.711 0.665 8 0.923 0.853 0.789 0.731 0.677 0.627 9 0.914 0.837 0.766 0.703 0.645 0.592 10 0.905 0.820 0.744 0.676 0.614 0.558 11 0.896 0.804 0.722 0.650 0.585 0.527 12 0.887 0.788 0.701 0.625 0.557 0.497 13 0.879 0.773 0.681 0.601 0.530 0.469 14 0.870 0.758 0.661 0.577 0.505 0.442 15 0.861 0.743 0.642 0.555 0.481 0.417 16 0.853 0.728 0.623 0.534 0.458 0.394 17 0.844 0.714 0.605 0.513 0.436 0.371 18 0.700 0.494 0.416 0.350 19 0.828 0.686 0.570 0.475 0.396 0.331 20 0.820 0.673 0.554 0.456 0.377 0.312 21 0.811 0.660 0.538 0.439 0.359 0.294 22 0.803 0.647 0.522 0.422 0.342 23 0.634 0.507 0.406 0.326 0.262 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258 0.242 0.226 0.211 0.429 0.397 0.368 0.340 0.315 0.292 0270 0.250 0.232 0.215 0.199 0.184 0.170 10% 12% 0.909 0.893 0.826 0.797 0.751 0.712 0.683 0.636 0.621 0.567 0.564 0.507 0.513 0.452 0.467 0.404 0.424 0.361 0.386 0.322 0.350 0.287 0.319 0.257 0.290 0.229 0.263 0.205 0.239 0.183 0.218 0.163 0.198 0.146 0.180 0.130 0.164 0.116 0.149 0.104 0.135 0.093 0.123 0.083 0.112 0.074 14% 15% 16% 18% 20% 0.877 0.870 0.862 0.847 0.833 0.769 0.756 0.743 0.718 0.694 0.675 0.658 0.641 0.609 0.579 0.592 0.572 0.552 0.516 0.482 0.519 0.497 0.476 0.437 0.402 0.456 0.432 0.410 0.370 0.335 0.400 0.376 0.354 0.314 0.279 0.351 0.327 0.305 0.266 0.233 0.308 0.284 0.263 0.225 0.194 0.270 0.247 0.227 0.191 0.162 0.237 0.215 0.195 0.162 0.135 0.208 0.187 0.168 0.137 0.112 0.182 0.163 0.145 0.116 0.093 0.160 0.141 0.125 0.099 0.078 0.140 0.123 0.108 0.084 0.065 0.123 0.107 0.093 0.071 0.054 0.108 0.093 0.080 0.060 0.045 0.095 0.081 0.069 0.051 0.038 0.083 0.070 0.060 0.043 0.031 0.073 0.061 0.051 0.037 0.026 0.064 0.053 0.044 0.031 0.022 0.056 0.046 0.038 0.028 0.018 0.049 0.040 0.033 0.022 0.015 0.836 0.587 0.252 0.231 0.212 0.194 0.178 0.278 0.164 0.150 0.138 0.795 th Print Done 1 of 3 (1 complete) Reference uring ation. vs fro s.) requir $1 table.) Periods o.. 1 table.) 2 3 4 5 2322 ARR. 6 gin by 5.076 at Cas! 7 8 9 10 4344 7.722 11 12 13 14 15 Present Value of Ordinary Annuity of $1 1% 2% 3% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.970 1.942 1.913 1.886 1.859 1.833 1.8081.783 1759 1.736 1.690 1647 1.626 1.605 1.566 1.528 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2531 2.487 2402 2.283 2.246 2.174 2.106 3.902 3.80B 3.717 3.630 3.546 3.465 3.387 3.312 3240 3.170 3.037 2.914 2.855 2.798 2.690 4.853 2589 4.713 4.580 4.452 4212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.991 5.795 5.601 5.417 5.242 4.917 4.767 4.623 4486 4.355 4 111 3.889 3.784 3.685 3.498 3.326 6.728 6.472 8.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 45644.288 4.160 4.039 3.812 3.605 7,652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4487 4.078 3.837 8.506 8.1627.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4,031 9.471 8.983 8.530 8.111 7.360 7.024 6.710 6.418 6.145 5.6505.216 5.019 4.833 4.494 4.192 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.658 4.327 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 5.197 4.793 4.439 12.13411.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.100 6.424 5.842 5,583 5.342 4.910 4.533 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5,008 4.611 13.865 12.849 11.938 11.118 10,380 9.712 9.108 8.559 8.061 7.606 6,811 6.142 5.847 5.575 5.092 4.675 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 5.9545.669 5.162 4.730 15.562 14.292 13.166 12.166 11 274 10.4779.703 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.467 6.128 5.818 5.2734.812 17226 15,678 14.32413.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4.844 18.046 16.351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.5147469 6.623 6.259 5.929 5.353 4.870 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 5.973 5,384 4.891 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10 201 9.442 8.772 7.645 6.743 6.359 6.011 5.410 20.456 18.292 16.444 14.857 13.489 12.303 11 272 10.371 9.5808.883 4.909 7.718 6.792 6.399 6.044 5.432 4.925 16 17 18 19 20 21 22 23 bor in the Print Done Reference Annu Future Value of $1 Periods huity 1 2 3 4 5 3% 1.030 1.061 1.093 1.126 1.159 5% 1.050 1.103 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 7% 1.070 1.145 1.225 1.311 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 1.090 1.188 1.295 1.412 1.539 6 7 1% 2% 1.010 1.020 1.020 1.040 1.030 1.061 1.041 1.082 1.051 1.104 1.062 1.126 1.072 1.149 1.083 1.172 1.094 1.195 1.105 1.219 1.116 1.243 1.127 1.268 1.138 1.294 1.149 1.319 1.161 1.346 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 1.340 1407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.587 1.714 1.851 1.999 2.159 S 9 10 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 mu 11 12 13 14 15 16 17 18 19 20 1.173 1.184 1.198 1.208 1.220 1.232 1.245 1.257 1.677 1.828 1.993 2.172 2.367 2.580 2.813 3.066 3.342 3.642 3.970 4.328 4.717 5.142 5.604 6.109 6.659 7.258 1.373 1.400 1.428 1.457 1.486 1.516 1.546 1.577 10% 12% 14% 15% 1.100 1.120 1.140 1.150 1.210 1.254 1.300 1.323 1.331 1.405 1.482 1.521 1.464 1.574 1.689 1.749 1.611 1.762 1.925 2011 1.772 1.974 2.195 2.313 1.949 2.211 2.502 2.660 2.144 2.476 2.853 3.059 2.358 2.773 3.252 3.518 2.594 3.106 3.707 4.046 2.853 3.479 4.226 4.652 3.138 3.896 4.818 5.350 3.452 4.363 5.492 6.153 3.798 4.887 6.261 7,076 4.177 5.474 7.138 8.137 4.595 6.130 8.137 9.358 5.054 6.866 9.276 10.76 5.560 7.690 10.58 12.38 6.116 8.613 12.06 14.23 6.727 9.646 13.74 16.37 7.400 10.80 15.67 18.82 8.140 12.10 17.86 21.64 8.954 13.55 20.36 24.89 1.710 1.796 1.886 1.980 2.079 2.183 2.292 2.407 2.527 2.653 2.786 2.925 3.072 1.605 1.653 1.702 1.754 1.806 1.860 1.916 1.974 1.898 2.012 2.133 2.261 2.397 2.540 2.693 2.854 3.026 3.207 3.400 3.604 3.820 1.873 1.948 2.026 2.107 2.191 2.279 2.370 2.465 2.105 2.252 2.410 2.579 2.759 2.952 3.159 3.380 3.617 3.870 4.141 4.430 4.741 2.332 2.518 2.720 2.937 3.172 3.426 3.700 3.996 4.316 4.661 5.034 5.437 5.871 21 22 23 input Print Done Reference D Innuity a wd ani Periods huity of $ 1 2 3 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 15% 1.000 2.150 3.473 4.993 6.742 4 PV 14% 1.000 2.140 3.440 4.921 6.610 8.536 10.73 13.23 16.09 19.34 5 letin 6 7 8 9 10 7.716 9.487 11.44 13.58 15.94 8.115 10.09 12.30 14.78 17.55 ws eumu 1% 2% 3% 1.000 1.000 1.000 2.010 2.020 2.030 3.030 3.060 3.091 4.060 4.122 4.184 5.101 5.204 5.309 6.152 6.308 6.468 7.214 7.434 7.662 8.286 8.583 8.892 9.369 9.755 10.16 10.46 10.95 11.46 11.57 12.17 12.81 12.68 13.41 14.19 13.81 14.68 15.62 14.95 15.97 17.09 16.10 17.29 18.60 17.26 18.64 20.16 18.43 20.01 21.76 19.61 21.41 23.41 20.81 22.84 25.12 22.02 24.30 26.87 23.24 25.78 28.68 24.47 27.30 30.54 25.72 28.85 32.45 Future Value of Ordinary Annuity of $1 4% 5% 6% 7% 8% 9% 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2.050 2.060 2.070 2.080 2.090 3.122 3.153 3.184 3.215 3.246 3.278 4.246 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 6.633 6.802 6.975 7.153 7.336 7.523 7.898 8.142 8.394 8.654 8.923 9.200 9.214 9.549 9.897 10.260 10.64 11.03 10.58 11.03 11.49 11.98 12.49 13.02 12.01 12.58 13.18 13.82 14.49 15.19 13.49 14.21 14.97 15.78 16.65 17.56 15.03 15.92 16.87 17.89 18.98 20.14 16.63 17.71 18.88 20.14 21.50 22.95 18.29 19.60 21.02 22.55 24.21 26.02 20.02 21.58 23.28 25.13 27.15 29.36 21.82 23.66 25.67 27.89 30.32 33.00 23.70 25.84 2821 30.84 33.75 36.97 25.65 28.13 30.91 34.00 37.45 41.30 27.67 30.54 33.76 37.38 41.45 46.02 29.78 33.07 36.79 41.00 45.76 51.16 31.97 35.72 39.99 44.87 50.42 56.76 34.25 38.51 43.39 49.01 55.46 62.87 36.62 41.43 47.00 53.44 60.89 69.53 11 12 13 14 15 16 17 18 19 20 18.53 21.38 24.52 27.98 31.77 35.95 40.54 45.60 51.16 57.28 64.00 71.40 79.54 20.65 24.13 28.03 32.39 37.28 42.75 48.88 55.75 63.44 72.05 81.70 92.50 104.6 23.04 27 27 32.09 37.58 43.84 50.98 59.12 68.39 78.97 91.02 8.754 11.07 13.73 16.79 20.30 24.35 29.00 34.35 40.50 47.58 55.72 65.08 75.84 88.21 102.4 118.8 137.6 159.3 21 22 23 104.8 120.4 1383 input Print Done from the two options: (Click the icon to view the net cash flows.) Gaynor uses straight-line depreciation and requires an annual return of 16% Read the rec Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish). Net Cash Outflows Net Cash Inflows Year Amount Invested Annual Accumulated $ 1,300,000 0 1 2 3 4 5 6 7 8 Choose from any list or enter any number in the input fields and then continue to the next question. Read the require years. The payback for Option 1 (refurbish current machine) is Now complete the payback schedule for Option 2 (purchase). Net Cash Outflows Net Cash Inflows Year Amount Invested Annual Accumulated 0 $ 2,300,000 1. 2 3 4 5 6 7 8 a Choose from any list or enter any number in the input fields and then continue to the next question. Read the requirements 9 10 (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of return) for each of the options. ARR % Refurbish Purchase % Compute the NPV for each of the options. Begin with Option 1 refurbish) (Enter the factors to three decimal places. X.XXX. Use parentheses or a minus sign for a negative not pn PV Factor Present Net Cash Inflow Years (1 = 16%) Value Present value of each year's inflow Choose from any list or enter any number in the input fields and then continue to the next question MacBook Pro Read the requirements Compute the NPV for each of the options. Begin with Option 1 (refurbish) (Enter the factors to three decimal places. XXX. Use parentheses or a minus sign for a negative not present value) Net Cash PV Factor Present Years Inflow 10% Value Present value of each year's infow. 1 In 1) 2 in 23 in 3 4 ind 5 in 5) in o) 3 7 in-8) Total PV of cashindows Choose from any list or on any number in the input fields and then continue to the next question Read the requirements (n = 8) Total PV of cash inflows 0 Initial investment Net present value of the project Now compute the NPV for Option 2 (purchase). (Enter the factors to three decimal places. X.XXX. Use parentheses or a minus sign for a negative not present value.) Net Cash Inflow PV Factor (16%) Present Value Years 1 2 Present value of each year's inflow In 1) In 2) (n = 3) In - 4 3 4 5 Choose from any list or enter any number in the input fields and then continue to the next question 10 view the net cash flows.) Gaynor uses straight-line depreciation and requires an annual retum of 16% (Click the icon to view Future Vale (Click the loon to view Future Valu Read the requirements 6 (n = 6) 7 8 (n = 7) (n = 8) (n=9) 10 (n = 10) Total PV of cash inflows 0 Initial investment Net present value of the project Finally, compute the profitability Index for each option. (Round to two decimal places X.XX.) Profitability index Refurbish Purchase Requirement 2. Which option should Gaynor choose? Why? Choose from any list or enter any number in the input fields and then continue to the next question 10 In 10) Total PV of cash intows 0 Initial investment Net present value of the project Finally, compute the profitability index for each option (Round to two decimal places XXX) - Profitability index Refurbish Purchase Requirement 2. Which option should Gaynor choose? Why? Review your answers in Requirement1 Gaynor should choose because this option has a payback period, an ARR that is the other option, a NPV and its profitability index Choose from any list or enter any number in the input fields and then continue to the next question Total PV of cash inflows 0 Initial investment Net present value of the project Finally, compute the profitability index for each option. (Round to two decimal places X.XX.) P Refurbish Purchase Requirement 2. Which option should Gaynor choose? Why? Review your answers in Requirement 1. Gaynor should choose because this option has a payback period, n continue to the next question. Choose from any list of Option 1, refurbish the current machine Option 2, purchase a new machine Mac ash inflows ment walue of the project ofitability index for each option. (Round to two decimal places X.XX.) Profitability index sh option should Gaynor choose? Why? in Requirement 1. se because this option has a payback period, an ARR that is the other option st or enter any number in the input fields and then continue to the longer shorter MacBook Pro o decimal places X.XX.) Profitability index higher than lower than the same as the other option, a NPV, and its profitability index is because this option has a payback period, an ARR that is and then continue to the next question. MacBook Pro Profitability index 11 payback period, an ARR that is the other option, a NPV, and its profitability index is uestion. negative positive -) Profitability index 11 as a payback period, an ARR that is the other option, a NPV, and its profitability index is higher the next question. lower