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 900,000 0 $ co 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 $ 2,100,000 1 2 3 4 5 9 10 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 Choose from any list or enter any number in the input fields and then continue to the next question. Net Cash PV Factor Present Years Inflow (i = 16%) Value 1 2 Present value of each year's inflow: (n = 1) (n=2) (n = 3) (n = 4) 3 4 01 (n = 5) 6 (n = 6) (n=7) 7 oo (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 Net Cash PV Factor (i = 16%) Present Value Years Inflow 1 2 N Present value of each year's inflow: (n = 1) (n = 2) (n = 3) (n = 4) (n = 5) 3 4 LA 6 7 8 (n = 6) (n=7) (n = 8) (n = 9) (n = 10) Total PV of cash inflows Initial investment IITTI 9 10 0 Finally, compute the profitability index for each option. (Round to two decimal places X.XX.) Profitability index Refurbish 11 11 Purchase Requirement 2 Which ontion should Hazen choose? Why? Requirement 2. Which option should Hazen choose? Why? Review your answers in Requirement 1. Hazen should choose NPV, and its profitability index is because this option has a payback period, an ARR that is the other option - X Data Table Year A 1 2 4 Refurbish Current Purchase New Machine Machine 370,000 $ 1,560,000 350,000 480,000 270,000 400,000 190,000 320,000 110,000 240,000 110,000 240,000 110,000 240,000 110,000 240,000 240,000 240,000 U 6 7 8 9 10 Print Done