St. Germaine Industries is deciding whether to automate one phase of its production process. The manufacturing equipenent has a six-year life and will cost $915,000 Projected net cash inflows are as follows: Click the icon to view the projected net cash inflows.) (Click the icon to view the present value table.) (Click the icon to view the present value annuity table.) (Click the icon to view the future value table.) (Click the icon to view the future value annuity table.) Read the requirements Requirement 1. Compute this project's NPV using St. Germaine Industries 16% hurdle rate. Should St Germaine Industries Invest in the equipment? Why or why not? Begin by computing the project's NPV (net present value). (Round your answer to the nearest whole dollar Lise parentheses or a minus sign for negative net present values.) Net present value Year 1 $260,000 Year 2 $253,000 . Year 3 $222,000 Year 4 $210,000 Year 5 $202,000 Year 6 $173,000 ent? pgati Present Value of 51 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.7940.751 0.712 0.675 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.856 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.404 0.361 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.692 0.500 0.424 0.361 0.308 0.263 0.225 0.194 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 Period 110.896 0,804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 Period 120.887 0.788 0.701 0.625 0.567 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 Period 130.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 Period 15 0.861 0.743 0.642 0.555 0 481 10.417 0.315 0.239 0.183 0.140 0.108 | 0.084 0.065 Period 200.820 0.673 0.554 0.456 0.377 0.312 | 0.215 0.149 0.104 0.073 0.051 0.037 0.026 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 Period 30 0.742 0.552 0412 0.308 0.231 0.174 0.099 0.067 0.033 0.0200.012 0.007 0.004 Period 40 0.672 0453 0.307 02080.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 Period 6 Period 7 Period 8 Period 9 Period 10 1.194 1.230 1.267 1.305 1.344 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 Future Value of $1 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 1.040 1.050 1.060 1.080 1.100 1.120 1.140 1.160 1.180 1.200 1.082 1.103 1.124 1.166 1.210 1.254 1.300 1.346 1.392 1.440 1.125 1.158 1.191 1.260 1.331 1.405 1.482 1.561 1.643 1.728 1.170 1.216 1.262 1.360 1.464 1.574 1.689 1.811 1.939 2.074 1.217 1.276 1.338 1.469 1.611 1.762 1.925 2.100 2 288 2.488 1.265 1.340 1.419 1.587 1.772 1.974 2.195 2.436 2.700 2.986 1.316 1.407 1.504 1.714 1.949 2.211 2.502 2.826 3.185 3.583 1.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 3.759 4.300 1.423 1.551 1.689 1.999 2.358 2773 3.252 3.803 4.435 5.160 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 5.234 6.192 1.539 1.710 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 1.601 1.796 2.012 2.518 3.138 3.896 4,818 5.936 7.288 8.916 1.665 2.133 2.720 3.452 4.363 5.492 6.886 8.599 10.699 1.732 1.980 2.261 2.937 3.797 4.887 6.261 7.988 10.147 12.839 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15,407 2.191 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 3.243 4322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 4.801 7.040 10.286 21.725 45.259 93.051 188.884 378.721 750,378 1.469.772 Period 11 Period 12 Period 13 Period 14 Period 15 1.384 1.426 1.469 1.513 1.558 1.886 1.486 Period 20 Period 25 Period 30 Period 40 1.220 1.282 1.348 1.489 1.641 1.811 2.208 1.806 2.094 2427 3.262 Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 Period 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2402 2.322 2.246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 4.039 3.812 3.605 Period 8 7.652 7.3257.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.303 4.031 Period 10 9.471 8.983 8.530 8.111 2.722 7.360 6.710 6.145 5.650 5.216 4833 4494 4.192 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4,439 Period 1312.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 6.342 4.910 4.533 Period 1413.004 12.106 11.296 10.563 9.899 9.296 8.244 7.3676.628 6.0025.468 5.008 4.611 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.659 7.606 6.811 6.142 5.575 5.092 4.675 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.4696.623 5.929 5.353 4.870 Period 25 22.023 19.523 17.413 15.622 14.094 12,783 10.675 9.077 7.8436.873 6.097 5.467 4.948 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 112589.427 8.055 7.003 6.177 5.517 4.979 Period 40 32.835 27355 23.115 19.793 17 159 15.046 11.925 9.779 | 8.244 7.105 6.233 5.548 4.997 Periods Period 1 Period 2 Period 3 Period 4 Period 5 3246 Period 6 Period 7 Period 8 Period 9 Period 10 Future Value of Annuity of $1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1,000 1.000 1.000 1.000 1.000 1.000 2.010 2020 2.030 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 3.030 3.060 3.091 3.122 3.153 3.184 3.310 3.374 3.440 3.506 3.572 3.640 4,060 4.122 4.184 4.246 4310 4.375 4.506 4,641 4.779 4.921 5.066 5.215 5.368 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 6.152 6.30B 6.468 6.633 6.802 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 7.214 7.434 7.662 7.898 8.142 8.394 8.923 9.487 10.089 10.730 11.414 12.142 12.916 8.286 8.583 8.892 9,214 9.549 9.897 10.637 11.436 | 12.300 13.233 14.240 15.327 16.499 9.369 9.755 10.159 10.583 11.027 11.491 12.488 13.579 14.776 16.085 17.519 19.086 20.799 10.462 10.950 11.464 12.006 12.578 13.181 1448715.937 17.549 19.337 21.321 23.521 25.969 11.567 12.169 12.808 13.486 14.207 14.972 16.645 | 18,531 20.655 23.045 25.733 28.755 32.160 12.683 13.412 14.192 15.026 15.917 16.870 18.977 21.384 24.133 27.271 30.850 34.931 39,581 13.809 14.680 16.618 16.627 17.713 18.882 21.495 24.523 28.029 32.089 36.786 42.219 48.497 14,947 15.974 17.086 18.292 | 19.599 21.015 24 215 27.975 32 393 37581 43.672 50.818 59.196 16.097 17 293 18.599 20.024 21.579 23.276 27,152 31.772 37 280 43.842 51.660 60.965 72.035 22.019 24.297 26.870 29.778 33,066 36.786 45.762 57 276 72.052 91.025 115.380 146.628 186.688 28.243 32.030 | 36459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 34.785 40.568 47.575 56,085 66.439 79.058 113,283 164.494 241.333 356.787 530.312 790.948 1,181.882 48.88660.402 75401 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757 4.163.2137343.858 Period 11 Period 12 Period 13 Period 14 Period 15 Period 20 Period 25 Period 30 Period 40 Requirements 1. Compute this project's NPV using St. Germaine Industries' 16% hurdle rate. Should the company invest in the equipment? Why or why not? 2. St. Germaine Industries could refurbish the equipment at the end of six years for $102,000. The refurbished equipment could be used one more year, providing $78,000 of net cash inflows in Year 7. In addition, the refurbished equipment would have a $53,000 residual value at the end of Year 7. Should St. Germaine Industries invest in the equipment and refurbish it after six years? Why or why not? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.)