Your answer is partially correct Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays, This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run provide for more accurate trench digging, have comfort features for the operatoes and have 1-year maintenance agreenlents to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes The following information is available to use in deciding whether to purchase the new backhoes. Old Backhoes New Backhoes Purchase cost when new $88,300 $196,068 Salvage value now $42.000 Investment in major overhaul needed its next year $53,879 Salvage value in 8 years $15.100 $90,000 3 years Byears Remaining life $30.100 $44,400 Net cash flow generated each year Click here to view PV table (a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.) (1) Using the net present value method for buying new or keeping the old. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. If the net present value is negative, use either a negative sign preceding the number og -45 or parentheses es (45). Round final answer to decimal places, eg. 5,275.) New Backhoes Old Backhoes Net Present Value equipment Waterways should by New Backhoes (2) Using the payback method for each choice (Hint For the old machine, evaluate the payback of an overhaul.) (Round answers to 2 decimal places, eg 1.25) Oros (3) Comparing the protability index for each choice. (Round answers to 2 decimal places, eg. 1.25) Old Backhoes New Backhoes Profitability Index equipment Waterways should retain Old Backhoes Calculate the internal rate of return factor for the new and old blackhoes (Round answers to 5 decimal places, es. 5.27647) Old Backhoes New Backhoes IRR Factor (4) Comparing the internal rate of return for each choice to the required 8% discount rate. retain Old Backhoes equipment Waterways should Profitability Index Waterways should retain Old Backhoes equipment Calculate the internal rate of return factor for the new and old blackhoes. (Round answers to 5 decimal places, eg. 5.27647) New Backhoes Old Backhoes IRR Factor (4) Comparing the internal rate of return for each choice to the required 8% discount rate, equipment Waterways should retain Old Backhoes e Textbook and Media Attempts: unlimited Submit Answer Table 1 Future Value of 1 (n) Periods 12% 15% 0 1.00000 1.00000 1 4% 5% 6% 7% 10% 11% 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.04000 1.05000 1.06000 1.07000 1.08000 1.09000 1.10000 1.11000 1.08160 1.10250 1.12360 1.14490 1.16640 1.18810 1.21000 1.23210 1.12486 1.15763 1.19102122504 1.25971 1.29503 1.33100 1.36763 1.12000 1.15000 2 1.25440 1.32250 3 1.40493 -1.52088 4 1.16986 1.21551 1.26248 1.31080 1.36049 1.41158 1.46410 1.51807 1.57352 1.74901 5 1.21665 1.27628 1.33823 1.40255 1.46933 1.53862 1.61051 1.68506 1.76234 2.01136 6 1.26532 1.34010 1.41852 1.50073 1.58687 1.67710 1.77156 1.87041 1.97382 2.31306 7 1.31593 1.40710 1.50363 1.60578 1.71382 1.82804 1.94872 2.07616 2.21068 2.66002 8 1.36857 1.47746 1.59385 1.71819 1.85093 1.99256 2.14359 2.30454 2.47596 3.05902 9 1.42331 1.55133 1.68948 1.83846 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788 10 1.48024 1.62889 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 4.04556 11 1.53945 1.71034 1.89830 2.10485 2.33164 2.58043 2.85312 3.15176 3.47855 4.65239 12 1.60103 1.79586 2.01220 2.25219 2.51817 2.81267 3.13843 3.49845 3.89598 5.35025 13 1.66507 1.88565 2.13293 2.40985 2.71962 3.06581 home 3.45227 3.88328 4.36349 6.15279 14 1.73168 1.97993 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4.88711 7.07571 References 6 1.41852 1.50073 1.55Z 1.67710 1.77156 1.87021 1.97382 2.31306 1 26532 1.34010 1.31593 1.40710 7 1.50363 1,60578 1.71382 2.68002 1.82804 1.94872 207616 2 21000 1.09256 2.14359 2.30454 2.47596 8 1.36857 1.47746 1.59385 1.71819 185093 3.05002 9 1.40331 1.55133 1.68948 1.83846 1.99900 2.171892.35705 2.56803 2.77308 3,51788 10 404556 11 1.48024 1.62889 1.79085 1.96715 2.15892 236736 2.59374 2.83942 3.10585 1.53945 1.71034 1.89830 2 10485 2.33164 2.58043 2.85312 3.15178 3.47855 1.60103 1.79586 2.01220 2.25219 2.51817 281267 3.13843 3.49845 3.89598 4.65239 12 5.35025 19 1.66507 1.88565 213293 2.40085 2.71962 3.06581 3.45227 3.88328 4.36349 6.15279 14 1.73168 1.97993 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4,88711 7.07571 15 1.80094 2.07893 2,39656 2.75903 3.17217 3.64248 4.17725 4.78459 5,47357 8.13706 16 1.87298 2.18287 2.54035 2.95216 3.42594 3.97031 4.59497 5.31089 6.13039 9.35762 17 1.94790 2.29202 2.69277 3.15882 3.70002 4.32763 5.05447 5.89509 6.86604 10.78126 18 2.02582 2.40662 2.85434 3.379933.99602 4.71712 5.55992 6.54355 7.68997 12.37545 19 2.10685 2.52695 3.02560 3.61653 4.31570 5.14166 6.11591 7.26334 8.61276 14.23177 20 2.19112 2.65330 3.20714 3.86968 4.66096 5.60441 6.72750 8.06231 9.64629 16.36654 Table 2 Future Value of an Annuity of 1 erences Table 2 Future Value of an Annuity of 1 n) Payments 4% 5% 0% 71 8% 10% 12% 15% 1 1,00000 1.00000 1.00000 1.0000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2.00000 2 2.04000 2.05000 2.00000 20700 208000 2.10000 2.11000 2.15000 2.12000 3.37440 3.12100 3.18360 32140 3.24640 327810 3.31000 3.34210 347250 3.15250 4 31013 4 4.24646 4 37462 4.4399 4.50611 4.57313 4.64100 4.70973 4.77933 4.99338 5 5.41632 5.52503 5.63709 5.7507 5.86680 5.98471 6.10510 8.22780 6,35285 6.74230 8.75374 6 6.63298 680191 6.97532 71533 7.33592 7.52334 7.71561 791286 8.11519 7 7.89829 8.14201 8.39384 8.6540 8.92280 9.20044 9.48717 9.78327 10.08901 11.06680 8 9.21423 9.54911 9.89747 10.2598 10.63663 11.02847 11.43589 11.85943 12.29969 13.72682 9 10.58280 11.02656 11.49132 11.9780 12.48756 13 02104 13.57948 14.16397 14.77566 16.78584 10 12.00611 12.57789 13.18079 13.8164 14.48656 15.19293 15.93743 16.72201 17.54874 20.30372 11 13.48635 14.20679 14.97164 15.7836 16,64549 17.56029 18.53117 19.56143 20.65458 24.34928 12 15.02581 15.91713 16 86994 17.8885 18.97713 20.14072 21.38428 22.71319 24.13313 29.00167 13 16.62684 17.71298 18.88214 20.1406 21.49530 22.95339 2452271 26.21164 28,02911 34.35192 14 18.29191 19.59863 21.01507 22.5505 24.21492 26.01919 27.97498 30.09492 32.39260 40.50471 15 20.02359 21.57856 23.27597 25.1290 27.15211 29.36092 31.77248 34.40536 37.27972 47.58041 References 7.898.29 14201 88540 839384 7 8.92280 948717 9.20044 11.06580 9.78327 10.08901 8 9.89747 9.21423 9.54911 12. 20969 103663 10.2598 11 02847 1372682 11.43589 11,85943 10.58280 11.02656 11.49132 11.9780 12.48756 13 02104 13.57948 14.16397 14.77566 16.78584 10 1200611 12.57789 13.18079 13,8164 14.48656 15.19293 15.93743 16.72201 17.54874 20.30372 11 13.48635 14.20679 14.97164 15.7836 16.84549 1756029 18.53117 19.56143 20.65458 24 34928 12 15,02581 15.91713 16.86994 17.8885 18 97713 20.14072 21 38428 22.71319 24.13313 29.00167 13 16.62684 17.71298 18.88214 20.1406 21.49530 22.95339 24.52271 26 21164 28.02911 34.35192 14 40.50471 18.29191 19.59863 21.01507 22.5505 24 21492 26.01919 27.97498 30.09492 32.39260 20.02359 21.57856 23.27597 25.1290 27.15211 29.36092 31.77248 34.40536 37.27972 15 47.58041 16 21 82453 23.65749 25.67253 27.8881 30.32428 33.00340 35.94973 39.18995 42.75328 55.71747 17 23 69751 25.84037 28.21288 30.8402 33.75023 36.97351 40.54470 44.50084 48.88367 65,07509 18 25.64541 28.13238 30.90565 33.9990 37.45024 41.30134 45.59917 50.39593 55.74972 75 83636 19 27.67123 30.53900 33.75999 37 3790 41.44626 46.01846 51.15909 56.93949 63.43968 88.21181 20 29.77808 33,06595 36.78559 40.9955 45.76196 51.16012 57.27500 64.20283 72.05244 102,44358 Table 3 Present Value of 1 (n) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% nces Table 3 Present Value of 1 9% 8% 12% 11% 15% 10% 7% 5% 4% (n) Periods 6% 96154 90090 1 8928686957 95238 91743 92593 93458 94340 90909 81162 85734 .79719 84168 .75614 82645 90703 89000 2 .87344 92456 65752 71178 77218 73119 .75132 83962 .86384 3 .79383 81630 88900 .57175 .65873 .79209 85480 4 63552 82270 .68301 73503 .70843 .76290 49718 56743 .59345 62092 .74726 .78353 82193 5 .71299 64993 .68058 50663 .53464 .66634 79031 6 43233 .74622 .56447 59627 70496 .63017 .75992 .62275 .71068 7 37594 45235 .66506 51316 54703 58349 .48166 62741 .67684 73069 46651 58201 8 50187 54027 40388 32690 .43393 .70259 28426 42410 59190 9 54393 .64461 5002546043 36061 .39092 67556 55839 .61391 46319 50835 .42241 38554 10 24719 .35218 -32197 .84958 58468 52679 11 -47509 .42888 .38753 31728 35049 28748 21494 12 44401 49697 .62460 28584 39711 55684 .18691 25668 35554 .31863 53032 46884 13 41496 60057 36770 25751 32618 22917 28966 .16253 50507 44230 14 38782 57748 34046 23199 29925 20462 26333 .14133 15 55526 48102 41727 36245 31524 27454 23939 20900 .18270 .12289 B211 CH3 720 ABD5 E-4003 600 50345 5611 01 79031 4822 704 A.34 A.30 17:00? 50447 3.114 5003492) 7592 F106B 6B 500 62275 BH149 54703 51316 14166 46235 37606 73069,67EBA ,82741 50:01 5402 50 17 46651 49399 40386 32600 9 TO250 14 59190 654399 150025 46043 2410 139092 360] 242 10 67566 461391 55839 50635 - 4631942241 38554 135218 32197 124719 11 6405 58466 -52679 47509 42 138753 35049 31728 28746 21494 12 62460 64 49697 44401 39711 365544 31663 28584 25 6 | 13 BC087 153032 46884 41496 13070 32618 28966 25751 22917 416253 67746 50507 44230 30792 34046 29925 26333 23190 20462 14133 15 55526 49102 41727 36245 31524 27454 23939 20900 18270 12299 16 153391 45811 39365 33673 29199 25187 21763 1629 16312 10687 17 51337 43630 37136 31657 27027 23107 19765 16963 114564 09293 18 49363 41552 135034 29566 25025 21199 -17986 15282 13004 20081 19 47464 439573 33051 27615 23171 19449 16351 1.13768 111611 .07027 20 1.45639 3769 31180 25842 21455 17643 14964 12403 10367 106110 Table 4 Present Value of an Annuity of 1 (n) Payments 4% 5% 6% 8% 9% 10% 11% 12% 15% 1 96154 95238 94340 93458 92593 .91743 90909 90090 .89286 .86957 2 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 3 2.77509 2.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 4 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 5 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 6 5.24214 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 7 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 8 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 9 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 10 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.650225.01877 11 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 12 9.38507 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 13 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 14 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 15 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 es 5.24214 507569 491732 4.76654 622 4.452 4.32 4.23054 11141 2.79448 5. 523 5.3899 5.20637 5,09295 4.12 1920 6376 4.16042 8 6.3274 6.46321 6.20979 597130 5.74EB4 5.5312 33493 5.14612 4.964 4.4732 9 7 43533 71072 6.80 169 6.5153 E24H9 5.99525 5.75902 5.53705 53262 4715 10 8.11090 772173 7.36009 702956 6.71006 6.41766 6.14457 5.88923 5.B502254177 11 8.7604 8.30641 7.8 7.49867 7.13806 680519 6.49506 6.20652 5.93770523971 12 9.38507 8.86325 8.38394 7.94269 753609 7.16073 6.81369 6.49236 6.19437 5.42C2 13 9.98565 9.39357 05209 ,35765 9027 7.49690 7-10336 6.74987 6.42355 5.58315 14 10.56312 9.69664 9.2949 8.74547 8.24424 778615 7.36669 6.98187 6.62917 5.72448 15 11.11839 10.37966 971225 9.10791 6.55946 8.06069 7.60606 7.19067 6.81086 5.84737 16 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.2371 7316 6.97399 5.95424 17 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.0215 7.54879 7.11963 6.04716 18 12.65930 11,68959 10.82760 10.05909 9.371 8.75563 2014 770 162 724967 6.12797 19 13.13394 12.09532 11.15812 10.33560 9.60360 8.9 012 0.36492 29 7.36576 6.19823 20 13.59033 12.16221 11.46992 10.59401 9.81615 9.12655 8.51356 7.96333 7.46944 6.25923