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12 The plant manager of ABC Manufacturing is considering the purchase of new automated assembly equipment. 13 14 New Equipment Cost 1,200,000 15 Direct Labor cost savings 16 Year 1 195,000 17 Year 2 225,000 18 Year 3 300,000 19 Year 4 362,000 20 Year 5 251,000 21 Year 6 187,500 22 Year 7 95,000 23 24 25 26 Calculations 27 28 1. What is the payback period on this project? 29 Annual Cash Cumulative Cash 30 Flow Flow 31 Year o enter a formula to compute the answer in yellow cells 32 Year 1 enter data in blue cells 33 Year 2 36 Year 3 35 Year 4 36 Year 5 37 Year 6 88 Year 7 39 payback occurs in approximately how many years and months? 12 12 Whale 22. What is the Net Present Value, assuming a 6% rate of return? 3 14 35 16 3. What is the Internal Rate of Return on this project? 48 49 50 4. Should this project be accepted? 51 S2 use the "F" formula to answer this question 53 5