SECTION B Making Investment Deteision for LECO Leco Inc. is considering replacing one of its lathes with either of two new lathes - LA or LB. To analyze the the two alternatives, Don has collected relavent Information as shown in table. W360,000 Initial Investment Year 1 2 3 4 5 LA LB W660,000 Cash inflows X128,000 182,000 W166,000 W168,000 450,000 488,000 W120,000 296,000 W86,000 V207,000 The cost of capital is 13%. And maximum payback period is 5 years. a. Use payback period to asses the acceptability and relative ranking of each Lathe. (10 pts) Draw cash flow diagram. Show the calculation process. b. Calculate NPV and use it for decision making and ranking (10 pts) Show calculation process ive Problem + - savings of $50,000 as equity and a $50,000 B D E c. Calculate IRR and use it for decision making and ranking (10 pts) Show calculation process + d. Summarize the preference indicated by the techniques used in parts a toc. Then indicate which one you will use for decision making.(10 pts) Word Limit: 80 words. 7 of 9 e77190a8c979b4c5.xls e77190a8c979b4c5.xls (Read-Only) (Compatibility Mode] sert Page Layout Formulas Data Review View Arial A- A+ > Wrap Text General by B 1 nat Merge & Center $. % ) Conditional Format Formatting as Table fr Bob started the firm with a $100,000 investment - his savings of $50,000 as equity and a $50,000 B D E F G Introduction to Corporate Finance e. If alternative LA & LB have different useful lives, say LA with 5 years whiit LB with 4 years. How will you solve the problem? (10 pt Provide 2 possible ways. No calculation needed. Word limit: 50 words