Question 7 of 12 - 14 HI! View Policies Current Attempt in Progress Garrett Boone, Ayayal Enterprises vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $201.868 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $20,000 per year. He also believes the lathe will reduce energy costs by $3,000 per year. If he purchases the new lathe, he will be able to sell the old lathe for $5,000 Click here to view the factor table. (a) Calculate the lathe's internal rate of return. (Round answer to o decimal places, e.g. 25%) Internal rate of return % (b) of Ayayai Enterprises uses a 6% hurdle rate, should Garrett purchase the lathe? (c) Without doing any calculations, what do you know about the lathe's net present value? Net present value will be APPENDIX 9.1 Present value of $1.received in n periods Periods 4% 5% 8% 9% 10% 1 2 3 4 5 0.9615 0.9246 0.8890 0.8548 0.8219 0.9524 0.9070 0.8638 0.8227 0.7835 6% 7% 0.9434 0.9346 0.8900 0.8734 0.8396 0.8163 0.7921 0.7629 0.7473 0.7130 0.9259 0.8573 0.7938 0.7350 0.6806 0.9174 0.8417 0.7722 0.7084 0.6499 0.9091 0.8264 0.7513 0.6830 0.6209 11% 12% 0.9009 0.8929 0.8116 0.7972 0.7312 0.7118 0.6587 0.6355 0.5935 0.5674 13% 14% 16% 0.8850 0.8772 0.8621 0.7831 0.7695 0.7432 0.6931 0.6250 0.6407 0.6133 0 5921 0.5522 0.5128 0.5194 04761 18% 20% 0.8475 0.8333 0.7182 0.6944 0.6086 0.5787 0.5158 0.4823 0.4371 0.4019 6 7 8 9 10 0.7903 0.7599 0.7307 0.7026 0.6756 0.7462 0.7050 0.6663 0.7107 0.6651 0.6227 0.6768 0.627 0.5820 0.6446 0.5919 05439 0.6139 0.5584 0.5083 0.6302 0.5835 0.5403 0.5002 0.4632 0.5963 0.5470 0.5019 0.4604 0.4224 0.5645 0.5346 0.5066 0.4803 0.4556 04104 0.3704 0.3349 0.5132 0.4817 0.4523 0.4251 0.3996 0.3538 0.313 0.2791 0.4665 0.4339 0.4039 0.3762 0.3506 0.3050 0.2660 0.2326 0.4241 0.3909 0.3606 0.3329 0.3075 0.2630 0.2255 0.1938 0.3855 0.3522 0.3220 0.29.46 0.2697 0.2267 0.1911 0.1615 11 12 13 14 15 0.6496 0.6246 0.6006 0.5775 0.5553 0.5847 0.5568 0.5303 0.5051 0.4810 0.5268 0.4970 0.4688 0.4423 0.4173 0.4751 0.4440 0.4150 0.3878 0.3624 04289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.1954 0.1619 0.1346 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1685 0.1372 0.1122 0 3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1452 0.1163 0.0935 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1252 0.0985 0.0779 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1079 0.0835 0.0649 16 17 18 19 20 0.4581 0.4363 0.4155 0.3957 0.3769 0.3936 0.3714 0.3503 0.3305 0.3118 0.5339 0.5134 0.4936 0.4746 0.4564 $1 (1 + 1) 0.3387 0.3166 0.2959 0.2765 0.2584 0.2176 0.1978 0.1799 0.1635 0.1486 0.2919 0.2519 0.2703 0.2311 0.2502 0.2120 0.2317 0.1945 0.2145 0.1784 0.1883 0.1631 0.1415 0.1229 0.0930 0.0708 0.0541 0.1696 0.1456 0.1252 0.1078 0.0802 0.0600 0.0451 0.1528 0.13000.1108 0.0946 0.0691 0.050S 00376 0.1377 0.1161 0.0981 0.0829 0.0596 0.0431 0.0313 0.1240 0.1037 0.0868 0.0728 0.0514 0.0365 0.0261 PV.. APPENDIX 9.2 Present value of an annuity of $1 per period Periods 6% 1 2 3 4 5 4% 0.9615 1.8861 2.7751 3.6299 4.4518 5% 0.9524 1.8594 2.7232 3.5460 4.3295 0.9434 1.8334 2.6730 3.4651 4.2124 7% 8% 9% 10% 0.9346 0.9259 0.9174 0.9091 1.8080 1.7833 1.7591 1.7355 2.6243 2.5221 2.5313 2.4868 3.3872 3.3121 3.2397 3.1698 4.1002 3.9927 3.8897 3.7907 11% 129 13% 14% 16% 18% 204 0.9009 0.8929 0.8850 0.8772 0.5621 0.8475 0.8333 1.7125 16901 1.6681 1.6 167 1.6052 1.5656 1.5278 2.4437 2.4018 2.3612 23216 2.2459 2.174 2.1065 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 25887 3.6959 36018 3.5172 3.4331 3.2743 3.1272 2.9906 6 7 8 9 10 5.2421 6.0021 6.7327 7.4353 8.1109 5.0757 5.7864 6.4632 7.1078 7.7217 4.9173 5.5824 6.2698 6.8017 7.3601 4.7665 4.62294.4859 4.3553 5.3893 5.2064 5.0330 4.8684 5.9713 5.7466 5.5348 5.3349 6.5152 6.2469 5.9952 5.7590 7.0236 6.7101 6.4177 6.1446 4.2305 4.7122 5.1461 5.5370 5.8892 4,1114 3.9975 3.8887 3.6847 3.4976 3.3255 4.5638 4.4226 4.2883 4.0386 3.8115 3.6016 4.9676 4.7988 4.6389 4.3436 4,0776 3.8372 53282 5.1317 4.9461 4.6065 4.3030 4,0310 5.6502 5.4262 5.2161 4.8332 44941 4 1925 11 12 13 14 15 8.7605 9.3851 9.9856 10.5631 11.1184 8.3064 8.8633 9.3936 9.8986 10.3797 7.8869 8.3838 8.8527 9.2950 9.7122 7.4987 7.1390 6.8052 6.4951 7.9427 7.5361 7.1607 6.8137 8.3577 7.9038 74869 7.1034 8.74558.2442 7.78627.3667 9.1079 8.5595 8.0607 7.6061 6.2065 59377 5.6869 5.4527 5.0286 46560 43271 6.4924 6.1964 59176 5.6603 5.1971 4.7932 4,4392 6.7499 6.4235 6.1218 5.8424 53423 4.9095 45327 6.9819 6.6282 6,3025 6,0021 5.46755.0081 4.6106 7.1909 6,8109 6.4624 6.1422 5.5755 5,0916 4.6755 6.6039 6.7291 68399 6.9380 70248 6.2651 63729 6.4674 6.5504 6.6231 5.6685 5.1624 4.7296 5.7487 5222347746 5.8178 52732 48122 58775 5316248435 5.9288 53527 4.8696 16 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 73792 69740 17 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8,0216 7.5488 7.1196 18 12.6593 11.6896 10.8276 10.0591 9.3719 87556820147.7016 7.2497 19 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 83649 7.8393 73658 20 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 1 $1 - (1 + i)" PVA=