Requirements 1. Compute this project's NPV using Eve's 16% hurdle rate. Should Eve invest in the equipment? Eve could refurbish the equipment at the end of six years for $102,000. The refurbished equipment could be used one more year, providing $74,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $52,000 residual value at the end of year 7. Should Eve 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.) 2. Print Done Eve Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $905,000. 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 Eve's 16% hurdle rate. Should Eve invest in the equipment? Use the following table to calculate the net present value of the project. (Enter any factor amounts to tree decimal places. XXXX. Use parentheses or a minus sign for a negative net present value.) PV Factor Net Cash Present 16%) (i Years Inflow Value Present value of each year's inflow 2 (n 2) 3 (n 3) (n4) 5 (n 5) Total PV of cash inflows 0 Initial investment Net present value of the projedt Eve Industries Vinvest in the equipment. Requirement 2. Eve could refurbish the equipment at the end of six years for $102,000. The refurbished equipment could be used one more year, providing $74,000 of net cash inflows in year 7, Additionally, the refurbished equipment would have a $52,000 residual value at the end of year 7, Should Eve 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.) 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 Present 16%) (i Value Refurbishment at the end of Year 6 (n Cash inflows in Year 7 (n = 7) Residual value (n = 7) Net present value of the refurbishment The refurbishment provides a 6) NPV. The refurbishment NPV is to overcome the original NPV of the equipment. Therefore, the alter Eve Industries' original decision regarding the equipment investment. Data Table Year 1 $ Year 2 Year 3 Year 4 Year 5 Year 6 265,000 255,000 225,000 210,000 200,000 174,000 Print Done Reference Present Value of S1 159 16% 1 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 0.84 0.833 2 0.980 0.961 0.943 0.925 0907 0.890 | 0.873 0.857 | 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694 3 0.971 0.942 0.915 0.889 0.864 0.840 | 0.8 16 0.794 | 0.772 0.751 0.712 0.675 | 0.658 0.641 0.609 0.579 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.6831 0.636 | 0.592 0.572 0.552 0.516 0.482 0.402 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 | 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.942 0.8 6 88 0.837 0.79 0.746 0.705 0.666 0.630 0.596 0.564 0.507 0.45 0.432 0.410 0.370 0.335 7 0.933 0.871 0.8 13 0.76 0.711 0.665 | 0.623 0.583 | 0.547 0.513 0.452 0.40 0.376 0.354 0.314 0.279 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 | 0.502 0.467 0.404 | 0.351 0.327 0.305 0.26 0.233 9 0.914 0.837 0.7 0.592 0.544 0.500 0.460 0.42 0.361 0.308 0.284 0.263 0.225 0.194 10 22 0.386 0.322 0.270 0.247 0.227 0.191 0.162 66 0.703 0.645 0905 | 0.820 | 0.744 | 0.676 | 0614 | 0.558 0.508 0463 | 04 11 0.896 0.30 0.722 0.650 0.585 0.527 | 0.475 0.429 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 12 0.887 | 0.788 0.701 0.625 0.557 0.497 | 0.444 0.397 | 0.356 0.319 0.257 | 0.208 0.187 0.168 0.137 0.112 13 0.879 0.773 0.681 0.601 0.530 0.469 | 0.415 0.368 | 0.326 0. 0.093 14 0.870 0758 0.661 0.57 0.505 0.442 0.388 0.340 | 0.299 0.263 0.205 0.160 | 0.141 0.125 0.099 0.078 15 0.861 0.743 0.642 0.555 0.481 0.4 17 | 0362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 008 0.065 0.319 0.257 0.208 0.187 0.168 0.137 0.11 290 | 0.229 | 0.182 | 0.163 | 0.145 | 0.116 .35 0.275 0.623 0.534 0.45 093 0.071 0.054 16 0.853 0.728 | 8 0.394 | 0.339 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 17 0.84-0.71-0605 0.513 | 0.436 0.371 0.317 0.27 0.231 0.198 0.146 | 0.108 0.093 0.080 0.060 0.045 18 0.83 0.70 0,587 0494 0.4 16 0.350 | 0.296 0.250 | 0.212 0 0.069 0.051 0.038 0 0,043 0,031 , 18 0.130 | 0095 0.081 19 0.828 | 0.686 0.570 0.475 0.396 0.331 | 0.277 0.232 0.194 0.164 0. I 16 0.083 0.070 0.060 0.043 0.031 20 0.820 0673 0.554 0.45 0.37 O.312 0.258 0.215 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.026 21 0.811 0.66 0.538 0.439 0.359 0.294 0.242 0.199 | 0.164 0.135 0.093 | 0.064 | 0.053 0.044 0.031 0.022 22 0.303 0.647 0.522 0.422 0.34| 0.278 | 0.226 0.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 ).074 | 049 0.040 | 0 033 | 0022 | 0.015 24 0.788 0.622 0492 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.066 | 0.043 0.035 0.028 0.019 0.013 75 0.295 0.233 0.1840.0.116 0.092 0.059 0.038 0.030 0.024 0.6 0.010 07 0.406 0.326 0.2620.20.1700.13 23 0.795 0.63-0.507 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0 25 0.780 0.610 0.478 0.375 0.295 0.23 0.184 0.146 0. I 16 0.092 | 0.059 | 0-038 0.030 0.024 0.016 0.010 26 0.772 0.598 0.464 0.361 0.281 0.220 | 0.172 0.135 0. 106 0.084 0.053 0.033 0.026 0.021 0.014 | 0.009 27 0.764 0.586 0.450 0.347 0.268 0.207 0.161 0.125 | 0.098 0.07 0.047 0.029 0.023 0.018 0.011 0.007 28 0.75 0.574 0.437 0.333 0.255 0.19 0.150 0.116 | 0.090 0.069 0.042 | 0.026 0.020 0.016 0.010 0.006 29 0.749 0.563 0.424 0.321 0.243 0.185 0.141 0.107 | 0.082 0.063 0.037 | 0.022 0.017 0.014 0.008 0.005 30 0.742 0.552 0.412 0.308 0.231 0.174 0.131 0.099 | 0.075 0.057 0.033 | 0.020 0.015 0.012 0.007 0.004 0.001 40 0.672 0.453 0.307 0.208 0.142 0.097 | 0.067 0.046 | 0.032 0.022 0.011 0.005 0.004 0.003 0.001 0.009 0.003 0.001 0.001 0.001 50 0.608 0.372 0.228 0.141 0.087 0.054 0.034 0.021 0.0 13 Print Done Reference Present Value of Ordinary Annuity of SI Pero) 01%-so 20% 971 0 962 952 1 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 2 1.970 1.942 1.913 1.88 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.64 1.626 1.605 1.56 1.528 3 2.941 2.884 | 2.829 | 2.775 2.723 2.673 2.624 2.577 | 2.531 | 2.487 2.402 2.322 | 2.283 | 2.246 | 2.174 | 2.106 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 | 3.24 3.170 3.037 2.914 2.855 2.798 2.69 2.589 5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 | 3.89 3.791 3.505 3.433 3.352 3.274 3.12 2.991 6 5.795 5.601 | 5.417 5.242 5.076 4.917 4.767 4.623 | 4.486 | 4.355 | 4.111 3.889 | 3.784 | 3.685 3.498 | 3.326 564 4.288 4.160 4.039 3.812 3.605 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 | 5535 5.335 4.968 4.639 4.487 | 4.344 4078 3.837 9 8566 8162 7786 7.435 7.108 6.802 6.515 | 6.247 | 5.995 | 5.759 5.328 4946 | 4.772 | 4.607 | 4.303 | 4.031 10 9.471 8.983 8.530 8.111 7.722 7.360 6145 5.650 5.216 5.019 | 4.833 4.494 | 4.192 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 | 6.805 6.495 5.938 5.4531 5.234 5.029 4.656 4.327 12 11.255 10.575| 9.954 9.385 8.863 8.384 7.943 7.536 7.16| 6.814 6.194 5.660 5.421 5.197 4.793 4.439 13 12. 134 11.3481 10.6351 9986 9.394 8.853 8.358 7.904 | 7.487 7.1031 6.424 5.8421 5.583 5.342 4.910 | 4533 14 13.004 i 2. 1061 11.2961 10.563 9.899 9.295 8.745 .244 | 7786 7.367 6.628 6.002 5.724 5.468 5.008 4.611 6.728 6472 6.230 6.002 5.78 5.582 5.389 5.206 5.033 4.8 6 5 684.5 7.024 6.710 6.418 5.724 5.46 008 4.611 15 13.865 12.8491 11.938 11.1 18 10.380 9.7 12 9-108 8.559 | 8.061 7.606 | 6.811 614| 5.847 5.575 5092 4.675 16 14.718 I 3.5781 12.561| 11.652 10.838 10.106| 9.447 8.85| | 8.3 13 7.824 6.974 6.265 5.954 | 5.669 5.162 4.730 17 15.562 14.292 13.166 12.166 11274 10.477 9.7639.122 8.5448.0227.120 6.373 6.0475.749 5.222 4.775 18 16.398 14.992| 13.754 12.659 11.690 10.828 10.059 9,372 8.75 8.201 7.250 6.46 6.128 5.818 5.273 4.812 19 17.226 15.678| 14.324| 13.134 12.085 11.158 10.336 9,604 | 8.950 8.365 7.366 655 6.198 | 5.877 5.31 4.844 20 18.046 16.351 | 14.877| 13.590 I 2.462 11.470 10.594 9.818 | 9,129 8.514 7.469 6.6231 6.259 5.929 5.353-.870 21 18.857 17.011 | 15.415|14.029 12.821 11.764 10.836 10.017| 9292 8649 | 7.562 6.68 6.312 | 5.973 5.384 4.891 22 19.660 I 7.658| 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 23 20.456 18.2921 16.444| 14.857 13.489 12.303 11.272 10.371| 9.58 8.883 7.7 18 6.792 6.399 | 6044 5.432 4.925 24 2 1.243 18.914| 16.936| 15.247 13.799 12.550 11.469| 10.529| 9.707 8.985 7.784 6.835 6.434 | 6.073 5.451 4.937 25 22.023 19.523| 17.413| 15.622 14.094 12.783 11.654| 10.675| 9.823 9.077 7.843 6.873 6.464 | 6097 5.467 4.948 26 22.795 20.121 | 17.877| 15.983 14.375 13.003 11.826 10.810| 9.929 9.161 7.896 690 6.491 | 6. I 18 5.480 | 4.956 492 4.964 28 24.3 16 21.281 | 18.764| 16.663 14.898 13.406 12.137 11.051 | 10.116| 9.307 7.984 6.961 6534 6.152 5.502 | 4.970 29 25.066 21.844 19.188 16.984 15.141 13.591 12.278 1.158 10.198 9.370 8,022 6.983 6.551 6.166 5.510 4975 30 25.808 396| 19.600|17.292 15.372 13.765 12.409| 11.258| 10.274| 9.427 8.055 7.003 6566 6.177 5.517 4.979 27 23.560 20.707 18.327 16.330 14.643 13.21.987 10.935 10.027 9.2377.943 .935 6.514 6.136 40 32.835 27.355| 23.115|19.793 17.159 15.046 13.332|11.925| 10.75 9779 8.244 7.105 6.642 | 6.2331 5.548 4.997 50 39. 196 31,424| 25.730| 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 7.1331 6.661 | 6.246 5.554 4.999 Print Done