- x More Info The company is considering two options. Option 1 is to refurbish the current machine at a cost of $2,000,000. If refurbished, Hazen expects the machine to last another eight years and then have no residual value. Option 2 is to replace the machine at a cost of $4,600,000. A new machine would last 10 years and have no residual value. Print Done . 1 Data Table Refurbish Current Machine Purchase New Machine Year Year 1 $ 500,000 $ 3,060,000 Year 2 800,000 580,000 Year 3 940,000 720,000 500,000 280,000 Year 4 360,000 Year 5 140,000 Year 6 140,000 280,000 Year 7 140,000 Year 8 140,000 280,000 280,000 280,000 280,000 Year 9 Year 10 $ 2,800,000 $ 6,900,000 Print Done 1 Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. 2. Which option should Hazen choose? Why? Print Done Hazen Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Hazen expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Hazen uses straight-line depreciation and requires an annual return of 14%. Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options, Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish). Net Cash Inflows Year Net Cash Outflows Amount Invested $ 2,000,000 Annual Accumulated 0 42 1 2 Enter any number in the edit fields and then click Check