Please answer the Requirements according to the form (The numbers are not the same). Please make sure your answer is correct. Thanksss
Cury 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: (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 Cury's 14% hurdle rate. Should Cury 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, X.XXX. Use parentheses or a minus sign for Data table Requirements Year 1 $ 263,000 Year 2 250,000 Year 3 225,000 1. Compute this project's NPV using Cury's 14% hurdle rate. Should Cury invest in the equipment? 2. Cury could refurbish the equipment at the end of six years for $100,000. The refurbished equipment could be used one more year, providing $77,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $54,000 residual value at the end of year 7. Should Cury 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.) Year 4 211,000 Year 5 201,000 Year 6 174,000 Print Done Print Done = - = Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Net Cash PV Factor (i Years Inflow = 16%) Present Value Year 1 Present value of each year's inflow: (n = 1) $ 263,000 0.862 $ 226,706 Year 2 Present value of each year's inflow: (n = 2) 255,000 0.743 189,465 Year 3 Present value of each year's inflow: (n = 3) 226,000 0.641 144,866 Year 4 Present value of each year's inflow: (n = 4) 215,000 0.552 118,680 Year 5 Present value of each year's inflow: (n = 5) 204,000 0.476 97,104 Year 6 Present value of each year's inflow: (n = 6) 174,000 0.410 71,340 Total PV of cash inflows 848,161 Year 0 Initial investment (920,000) (71,839) Net present value of the project Swan Industries should not invest in the equipment. minnnnn .. m2 Calculate the NPV of the refurbishment. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for cash outflows and for a negative net present value.) Cash PV Factor (i = (outflow)/inflow 16%) Present Value Refurbishment at the end of Year 6 (n = 6) $ (103,000) 0.410 $ (42,230) Cash inflows in Year 7 (n = 7) 75,000 0.354 26,550 Residual value (n = 7) 50,000 0.354 17,700 $ 2,020 Net present value of the refurbishment = The refurbishment provides a positive NPV. The refurbishment NPV is not large enough to overcome the original NPV of the equipment. Therefore, the refurbishment should not alter Swan Industries' original decision regarding the equipment investment
