Requirement 1. Compute the payback, the ARR, the NPV, and the pro Compute the payback for both options. Begin by completing the payba Net Cash Outflows Data Table More Info Net Cash Inflows Year Amount Invested Annual Accumulated Year Machine Machine 0 $ 2,600,000 Year 1 $ 2,000,000 $ 1 $ 2,000,000 $ 2,000,000 Year 2 470,000 2 470,000 2,470,000 Year 3 360,000 2,610,000 600,000 490,000 Refurbish Current Purchase New The company is considering two options. Option 1 is to refurbish the current machine at a cost of $2,600,000. If refurbished, Joslin 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 $3,800,000. A new machine would last 10 years and have no residual value. 3 360,000 2,830,000 Year 4 250,000 380,000 4 250,000 3,080,000 Year 5 140,000 270,000 Print Done LQ 5 140,000 3,220,000 Year 6 140,000 270,000 6 140,000 3,360,000 Year 7 140,000 270,000 140,000 3,500,000 Year 8 140,000 270,000 8 140,000 3,640,000 Year 9 270,000 (Round your answer to one decimal place.) 270,000 Year 10 $ 3,640,000 $ 5,700,000 Enter any number in the edit fields and then click Check Answer. Total Net Cash Outflows Net Cash Inflows Year Amount Invested Annual 0 $ 3,800,000 1 2 3 4 7 8 561 0 9 10 Accumulated $ 2,610,000 $ 2,610,000 600,000 3,210,000 490,000 3,700,000 380,000 4,080,000 270,000 4,350,000 270,000 4,620,000 270,000 4,890,000 270,000 5,160,000 270,000 5,430,000 270,000 5,700,000 (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years. The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of return) for each of the options. Refurbish Purchase = ARR % % 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 Net Cash PV Factor Present Years Inflow (i = 10%) Value Present value of each year's inflow: 1 (n=1) 2 (n=2) 3 (n=3) 4 (n = 4) 5 (n = 5) 6 (n=6) 7 (n=7) 8 (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 net present value.) Net Cash PV Factor Years Inflow (i = 10%) Present Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) 4 (n=4) F In-5 5 (n = 5) 6 (n = 6) 7 (n=7) 8 (n = 8) 9 (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.) Refurbish Purchase Requirement 2. Which option should Hazen choose? Why? Review your answers in Requirement 1. Hazen should choose Profitability index = = because this option has a payback period, an ARR that is the other option, a NPV, and its profitability index is Present Value of $1 Periods Period 1 1% 2% 3% 4% 5% 6% 0.990 0.980 0.971 0.962 0.952 0.943 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 Period 6 Period 7 0.933 0.871 0.813 0.760 Period 8 0.923 0.853 0.789 0.731 0.677 Period 9 0.914 0.837 0.766 0.703 0.645 Period 10 0.905 0.820 0.744 0.676 0.614 0.942 0.888 0.837 0.790 0.746 0.705 0.711 0.665 Period 11 0.896 0.804 0.722 0.650 0.585 Period 12 0.887 0.788 0.701 0.625 0.557 Period 13 0.879 0.773 0.681 0.601 Period 14 0.870 0.758 0.661 0.577 0.505 0.497 0.530 0.469 0.415 0.442 0.388 0.429 0.397 0.368 0.340 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.666 0.630 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.623 0.583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 0.627 0.582 0.540 0.502 0.467 0.404 0.351 0.327 0.305 0.266 0.233 0.592 0.544 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.558 0.508 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 0.527 0.475 0.444 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.873 0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694 0.816 0.794 0.735 0.713 0.681 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 0.299 0.263 0.205 0.160 0.141 0.125 0.099 0.078 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Period 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 Period 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 Period 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 Period 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 Period 21 0.811 0.660 0.538 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.093 Period 22 0.803 0.647 0.522 0.422 0.342 0.278 0.226 Period 23 0.795 0.634 0.507 0.406 0.326 Period 24 0.788 0.622 0.492 0.390 0.310 0.247 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.262 0.211 0.197 0.184 0.146 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 0.270 0.231 0.198 0.146 0.108 0.093 0.080 0.060 0.045 0.250 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 0.232 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.031 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.026 0.064 0.053 0.044 0.031 0.022 0.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 0.170 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.015 0.158 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.013 0.116 0.092 0.059 0.038 0.030 0.024 0.016 0.010 Dariod of 10 770 0500 0161 0.261 0001 0172 0125 0106 0.052 0.022 0.026 0.021 0.011 0.000 Present Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% Period 1 0.990 0.980 0.971 0.962 Period 2 1.970 1.942 1.913 1.886 Period 3 2.941 2.884 2.829 2.775 Period 4 3.902 3.808 3.717 3.630 Period 5 4.853 4.713 4.580 4.452 5% 6% 7% 8% 9% 10% 0.952 0.943 0.935 0.926 0.917 0.909 1.859 1.833 1.808 1.783 1.759 1.736 2.723 2.673 2.624 2.577 2.531 2.487 3.546 3.465 3.387 3.312 3.240 3.170 4.329 4.212 4.100 3.993 3.890 3.791 Period 6 5.795 5.601 5.417 5.242 12% 14% 15% 16% 18% 20% 0.893 0.877 0.870 0.862 0.847 0.833 1.690 1.647 1.626 1.605 1.566 1.528 2.402 2.322 2.283 2.246 2.174 2.106 3.037 2.914 2.855 2.798 2.690 2.589 3.605 3.433 3.352 3.274 3.127 2.991 5.076 4.917 4.767 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 Period 11 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 4.656 4.327 Period 12 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 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 4.910 4.533 Period 14 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 Period 15 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 Period 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 5.954 5.669 5.162 4.730 Period 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 Period 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.812 Period 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4.844 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6.259 5.929 5.353 4.870 Period 21 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 Period 22 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 4.909 Period 23 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 7.718 6.792 6.399 6.044 5.432 4.925 Period 24 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 6.835 6.073 5.451 4.937 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 7.843 6.873 6.097 5.467 4.948 4.623 4.486 4.355 4.111 3.889 3.784 3.685 3.498 3.326 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.605 5.747 5.535 5.335 4.968 4.639 4.487 4.344 4.078 3.837 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.031 6.710 6.418 6.145 5.650 5.216 5.019 4.833 4.494 4.192 Daried 26 |22 705|20 121 17 077 15 002 11 275 12.002 11.806 10 9100.000. 9.077 6.434 6.464 0.161 7.906 101 G110 5 100 1.056 Future Value of $1 Periods 1% 2% 3% Period 1 1.010 1.020 1.030 Period 2 1.020 1.040 1.061 Period 3 1.030 1.061 4% 5% 6% 7% 1.040 1.050 1.060 1.070 1.082 1.103 1.124 1.145 1.093 1.125 1.158 1.191 1.225 Period 4 1.041 1.082 1.126 1.170 1.216 1.262 1.311 8% 9% 10% 1.080 1.090 1.100 1.166 1.188 1.210 1.260 1.295 1.331 1.360 1.412 1.464 12% 14% 15% 1.120 1.140 1.150 Period 5 1.051 1.104 1.159 1.217 1.276 1.338 1.403 1.469 1.539 1.611 1.254 1.300 1.323 1.405 1.482 1.521 1.574 1.689 1.749 1.762 1.925 2.011 Period 6 1.062 1.126 Period 7 1.072 1.149 1.194 1.265 1.340 1.419 1.501 1.230 1.316 1.407 1.504 1.587 1.677 1.772 Period 8 1.083 1.172 Period 9 1.094 1.195 Period 10 1.105 1.219 1.267 1.369 1.477 1.594 1.718 1.305 1.423 1.551 1.689 1.344 1.480 1.629 1.791 Period 11 1.116 Period 12 Period 13 Period 14 Period 15 Period 16 Period 17 1.184 Period 18 1.196 Period 19 1.208 Period 20 1.220 Period 21 Period 22 1.373 1.605 1.873 2.183 2.540 2.952 1.400 1.653 1.948 2.292 2.693 3.159 1.428 1.702 2.026 2.407 2.854 3.380 1.457 1.714 1.828 1.949 1.851 1.993 2.144 1.999 2.172 2.358 2.159 2.367 2.594 1.243 1.384 1.539 1.710 1.898 2.105 2.332 2.580 2.853 3.479 4.226 4.652 1.127 1.268 1.426 1.601 1.796 2.012 2.252 2.518 2.813 3.138 3.896 4.818 5.350 1.138 1.294 1.469 1.665 1.886 2.133 2.410 2.720 3.066 3.452 4.363 5.492 6.153 1.149 1.319 1.513 1.732 1.980 2.261 2.579 2.937 3.342 3.798 4.887 6.261 7.076 1.161 1.346 1.558 1.801 2.079 2.397 2.759 3.172 3.642 4.177 5.474 7.138 8.137 1.173 1.606 1.974 2.195 2.313 2.211 2.502 2.660 1.838 1.967 2.476 2.853 3.059 2.773 3.252 3.518 3.106 3.707 4.046 3.426 3.970 4.595 3.700 4.328 5.054 3.996 4.717 5.560 6.130 8.137 9.358 6.866 7.690 9.276 10.76 10.58 12.38 1.754 2.107 2.527 3.026 3.617 4.316 5.142 6.116 8.613 12.06 14.23 1.486 1.806 2.191 2.653 3.207 3.870 4.661 5.604 6.727 9.646 13.74 16.37 1.860 2.279 2.786 3.400 4.141 1.232 1.516 1.245 1.546 1.916 2.370 2.925 3.604 4.430 5.437 6.659 8.140 Period 23 1.257 1.577 1.974 2.465 3.072 3.820 4.741 5.871 7.258 8.954 13.55 20.36 24.89 Period 24 1.270 1.608 2.033 2.563 3.225 4.049 5.072 6.341 7.911 9.850 15.18 23.21 28.63 Period 25 1.282 1.641 2.094 2.666 3.386 4.292 5.427 6.848 8.623 10.83 17.00 26.46 32.92 5.034 6.109 7.400 10.80 15.67 18.82 12.10 17.86 21.64 Period 26 1.205 1.672 2157 2.772 2.556 1.510 5907 7.206 0.200 11.02 10.01 2017 27.96 Future Value of Ordinary Annuity of $1 1% 2% Period 4 Period 5 Periods 4% 5% 6% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2.020 2.030 2.040 2.050 2.060 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 4.060 4.122 4.184 4.246 4.310 4.375 5.101 5.204 5.309 5.416 5.526 5.637 3% 7% 8% 9% 10% 12% 14% 15% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.070 2.080 2.090 2.100 2.120 2.140 2.150 3.215 3.246 3.278 3.310 3.374 3.440 3.473 4.440 4.506 4.573 4.641 5.751 5.867 5.985 6.105 4.779 4.921 4.993 6.353 6.610 6.742 Period 9 Period 10 Period 6 6.152 6.308 6.468 6.633 6.802 Period 7 7.214 7.434 7.662 7.898 8.142 Period 8 8.286 8.583 8.892 9.214 9.549 9.369 9.755 10.16 10.58 11.03 10.46 10.95 11.46 12.01 6.975 8.394 9.897 7.153 7.336 7.523 7.716 8.115 8.536 8.754 8.654 8.923 9.200 9.487 11.49 12.58 13.18 10.260 10.64 11.03 11.44 11.98 12.49 13.02 13.58 13.82 14.49 15.19 15.94 17.55 19.34 20.30 10.09 10.73 11.07 12.30 13.23 13.73 14.78 16.09 16.79 Period 11 Period 12 Period 13 12.17 12.81 13.49 Period 14 Period 19 Period 15 Period 16 17.26 18.64 20.16 21.82 23.66 Period 17 18.43 20.01 21.76 23.70 25.84 Period 18 19.61 21.41 23.41 25.65 28.13 20.81 22.84 25.12 27.67 30.54 11.57 12.68 13.41 13.81 14.68 15.62 16.63 14.95 15.97 17.09 18.29 19.60 16.10 17.29 18.60 20.02 21.58 14.21 14.97 14.19 15.03 15.92 16.87 17.71 18.88 21.02 23.28 25.67 28.21 30.91 15.78 16.65 17.56 18.53 20.65 23.04 24.35 17.89 18.98 20.14 21.38 20.14 21.50 22.95 24.52 22.55 24.21 26.02 27.98 25.13 27.15 29.36 31.77 27.89 30.32 33.00 35.95 30.84 33.75 36.97 40.54 24.13 27.27 29.00 28.03 32.09 34.35 32.39 37.58 40.50 37.28 43.84 47.58 34.00 37.45 41.30 45.60 42.75 50.98 55.72 48.88 59.12 65.08 55.75 68.39 75.84 33.76 Period 20 22.02 24.30 26.87 29.78 33.07 36.79 37.38 41.45 46.02 51.16 41.00 45.76 51.16 57.28 Period 21 Period 25 23.24 25.78 28.68 31.97 35.72 Period 22 24.47 27.30 30.54 34.25 38.51 Period 23 25.72 28.85 32.45 36.62 41.43 Period 24 26.97 30.42 34.43 39.08 44.50 28.24 32.03 36.46 41.65 47.73 39.99 63.44 78.97 88.21 72.05 91.02 102.4 44.87 50.42 56.76 64.00 81.70 104.8 118.8 43.39 49.01 55.46 62.87 71.40 92.50 120.4 137.6 47.00 53.44 60.89 69.53 79.54 104.6 138.3 159.3 50.82 58.18 66.76 76.79 88.50 118.2 54.86 63.25 73.11 84.70 98.35 133.3 158.7 184.2 181.9 212.8 Period 26 20.52 22.67 28.55 11.21 51 11 50 16 70.05 02 22 1002 1502 209 2 215 7