Tippy Toe Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company is considering purchasing the following spa equipment:

	Laser Hair Removal Machines	Microdermabrasion Machines	Facial Oxygen Units
Cost per Machine	$65,700	$31,900	$25,400
Annual Cash Inflow	$124,300	$211,300	$39,700
Annual Cash Outflow	$89,300	$195,800	$26,900
Required Rate of Return	10%	13%	5%
Useful Life	4 years	4 years	2 years
Residual Value	$860	$830	$0

Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $Answer Microdermabrasion Machine: $Answer Facial Oxygen Unit: $Answer b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $Answer Microdermabrasion Machine: $Answer Facial Oxygen Unit: $Answer c) Determine the payback period for each piece of equipment. Round your answers to 1 decimal place. Laser Hair Removal Machine: Answer Years Microdermabrasion Machine: Answer Years Facial Oxygen Unit: Answer Years

This is an example solution down below

Net present value

Laser Hair Removal Machine	$18,796
Microdermabrasion Machine	$10,014
Facial Oxygen Unit	($7,309)

Working notes:

Annual net cash flow = Annual cash inflow - Annual cash outflow

Laser Hair Removal Machine	$125,900 - $91,700 = $34,200
Microdermabrasion Machine	$213,900 - $198,300 = $15,600
Facial Oxygen Unit	$37,300 - $28,700 = $8,600

Net Present Value - Laser Hair Removal Machine

Year	Cash Flow	PVF @ 11%	Discounted Cash flow
1 - 3	$34,200	2.4437	$83,575
3	$850	0.7312	622
		Present value of cash inflow	$84,196
		Less: Investment	(65,400)
		NPV	$18,796

Net Present Value - Microdermabrasion Machine

Year	Cash Flow	PVF @ 11%	Discounted Cash flow
1 - 3	$15,600	2.4437	$38,122
3	$810	0.7312	592
		Present value of cash inflow	$38,714
		Less: Investment	(28,700)
		NPV	$10,014

Net Present Value - Facial Oxygen Unit

Year	Cash Flow	PVF @ 5%	Discounted Cash flow
1 - 2	$8,600	1.8594	$15,991
		Present value of cash inflow	$15,991
		Less: Investment	(23,300)
		NPV	($7,309)

Requirement b:

Maximum acceptable price using the NPV method

Laser Hair Removal Machine	$84,196
Microdermabrasion Machine	$38,714
Facial Oxygen Unit	$15,991

Requirement c:

Payback period

Laser Hair Removal Machine	1.9 years
Microdermabrasion Machine	1.8 years
Facial Oxygen Unit	2.7 years

Working notes:

Payback period = Initial Investment / Annual net cash flow

Laser Hair Removal Machine	$65,400 / $34,200 = 1.9 years
Microdermabrasion Machine	$28,700 / $15,600 = 1.8 Years
Facial Oxygen Unit	$23,300 / $8,600 = 2.7 years