Save Help X-Wing Delivery is a small company that transports Kyber crystals between Lothal and Bespin. It operates a fleet of small transport ships that moves crystals to and from a central depot within each planet and uses a common carrier to deliver the crystals between the depots on the two planets. X-Wing Delivery recently acquired approximately $5.6 million of cash capital from its owners, and its president, Lando Calrissian, is trying to identify the most profitable way to invest these funds. Han Solo, the company's operations manager, believes that the money should be used to expand the fleet of transport ships at a cost of $670,000. He argues that more ships would enable the company to expand its services into new markets, thereby increasing the revenue base. More specifically, he expects cash Inflows to increase by $260,000 per year. The additional ships are expected to have an average useful life of four years and a combined salvage value of $103,000. Operating the ships will require additional working capital of $46,000, which will be recovered at the end of the fourth year. In contrast, Luke Skywalker, the company's chief accountant, believes that the funds should be used to purchase a freighter to deliver the crystals between the depots in the two cities. The conversion process would produce continuing improvement in operating savings and reduce cash outflows as follows. Year 1 Year 2 Year 4 $154,000 $313,000 $390,000 Year 3 $446,000 The large freighters are expected to cost $750,000 and to have a four-year useful life and a $87,000 salvage value. In addition to the purchase price of the freeighters, up-front pilot training costs are expected to amount to $15,000. X-Wing Delivery's management has established a 8 percent desired rate of return. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a.&b. Determine the net present value and present value index for each investment alternative. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answer in whole dollars and not in millions.) Purchase of Transport Ships Purchase of Freighter) a. Net Present Value (NPV) b: Present Value Index (PVI) TABLE 1 PRESENT VALUE OF $1 1 2 3 4 5 6 7. 8 9 10 49 0.961538 0.924556 0.888996 0.854804 0.821927 0.790315 0.759918 0.730690 0.702587 0.675564 0.649581 0.624597 0.600574 0.577475 0.555265 0.533903 0:513373 0.493628 0.474642 0.456357 5 0.952381 0.907029 0.863338 0.822702 0.753526 0.746215 0.710681 0.676839 0.644609 0.613913 0.584679 0.556837 0.530321 0.505063 0.481017 0.458112 0.436297 0.415521 0.395734 0.376589 0.943396 0.839996 0.839619 0.792094 0.747258 0.704961 0.665057 0.627412 0.591898 0.558395 0.526785 0.496969 0.468839 0.442301 0.417265 0.393616 0.371364 0.350344 0.330513 0.311805 7% 8% 9% 10% 12 145 16% 20% 0.934579 0.925926 0917431 0.909091 0.892857 0.877193 0.862069 0.833333 0.873439 0.857339 0.941680 0.826446 0.797194 0.769468 0.743163 0.694444 0.816298 0.793832 0.772 183 0.751315 0.711750 0.674972 0.610658 0.578704 0.762895 0.735030 0.708425 0.683013 0.635518 0.592080 0.552291 0.482253 0.712936 0.650583 0.649931 0.620921 0.567427 0.519369 0.476113 0.401678 0.666342 0.630170 0.596267 0.564474 0.506631 0.455587 0.410142 0.334895 0.622750 0.583490 0.547034 0.513155 0.452349 0.399637 0.353330 0279082 0.582009 0.540269 0.501366 0.466507 0.403883 0.350559 0 305025 0.232568 0.543934 0.500249 0.460428 0.424098 0 360610 0.307508 0.262953 0.193807 0.508 349 0.463193 0.422411 0.385543 0:321973 0.269744 0226684 0.161506 0.475093 0.423983 0.387533 0.350494 0.297476 0.236617 0.195417 0.134585 0.444012 0.397114 0.355535 0.318631 0.256675 0.207559 0 112157 0.414964 0.367699 0.326179 0.289664 0.229174 0.192069 0.145227 0.093164 0.387817 0.340461 0.299246 0.263331 0.201620 0.159710 0.125195 0077087 0.362446 0.315242 0.274535 0.239392 0.182696 0.1-10096 0.107927 0061905 0.338735 0.291390 0.251570 0217629 0.163122 0.122992 0.093041 0.09403 0.316574 0.270269 0.231073 0197545 0.145644 0.107800 0000207 0.015023 0.295561 0.250249 0.2119010 179559 0.130040 0.09.1561 0 069144 0.033561 0.276505 0.231712 0.194190 0.163503 0.116107 0.0 2943 0 059607 0.031301 0.253419 0.214545 0.178431 0.145644 0.103667 0.072762 0.0513850026004 12 165463 13 15 16 17 13 19 20 TABLE 2 PRESENT VALUE OF AN ANNUITY OF $1 PP 5% 1 2 3 4 5 6 7 S 9 4% 0961538 1 886095 2.775091 3629895 4.451822 5.242137 6 002055 6.732745 7.435332 8.110896 S. 760477 9,385074 9.985648 10.563123 TL 119387 |b52296 12 165669 12.659297 13:133939 13 590326 10 11 0.952381 1.859410 2.723248 3.545951 4.329477 5.075692 5.786373 6.463213 7.107822 7.721735 9.306414 8.863252 9.393573 9.398641 10.379658 10.337770 11274006 11.639557 12.035321 12.162210 65 0.943396 1.833393 2.673012 3.465106 4.212364 4 917324 5.582381 6.209794 6.801692 7.360087 7.556875 8.383844 8.852683 9.294984 9.712249 10.105895 10.477260 10.827603 11.155116 11.469921 7% 0.934579 1 SOSOIS 2.624316 3.387211 4.100197 4.766540 5.399289 5.971299 6.515232 7.023582 7.498674 7.942686 8.357651 8.745468 9. 107914 9.4466-19 9.763223 10.059087 10.335595 10.594014 8% 0.925926 1.783265 2.577097 3.312127 3.992710 4.622580 5.206370 5.746639 6.246886 6.710081 7.138964 7.536078 7.903776 8.244237 3 559.479 3.851369 9.121638 9.371887 9.603599 9 SIST-17 9% 10% 129 14% 16% 0.917431 0.909091 0.892857 0.877193 0.862069 1.759111 1.735537 1.690051 1.646661 1.605232 2.531295 2.486852 2.401831 2.321632 2.245890 3.239720 3.169365 3.037349 2.913712 2.798181 3.889651 3.790787 3.604776 3.433081 3.274294 4.485919 4.355261 4.111407 3.888663 3.684736 5.032953 4.868419 4 563757 4.288305 4038565 5 534519 5.334926 4.967640 4.638864 4.343591 5.995247 5.759024 5.325250 4946372 4.6065.14 6.417658 6.144567 5.650223 5.216116 4833227 6.S05191 6.495061 5.937699 5.452733 5.028644 7.160725 6.SI 3692 6.194374 5.660292 5.197107 7.486904 7.103356 6.423548 5.342362 5.342334 7.736150 7366687 6.628168 6.002072 5.467529 8060685 7.606080 6 S10861 6.142165 5.575456 8.312558 7.523709 6.973986 6.265060 5.009497 8.543631 8.021553 7119630 6.372859 5.745704 8.755625 8.201-12 72249670 6.167420 3.817845 8.905115 8.364920 7.365777 6.550369 5.577455 9128516 S. 513564 7.169.144 6.623131 5.928541 20% 0.833333 1527778 2.106481 2.588735 2.990612 3.325510 3.604592 3.837160 4.030967 4.192472 4.327060 4.439217 4532681 4610567 4675473 4.729501 4774634 4312195 4.843490 4.509550 12 13 14 15 16 17 18 19 20