formation.) Data table Refurbish Current Purchase New Year Machine Machine Year 1 $ 20,000 $ 1,230,000 Year 2 460,000 610,000 Year 3 340,000 490,000 Year 4 220,000 370,000 Year 5 100,000 250,000 Year 6 100,000 250,000 Year 7 100,000 250,000 Year 8 100,000 250,000 Year 9 250,000 250,000 Year 10 $ 1,440,000 $ 4,200,000 Total Print Done - K Gammon Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Gammon expects the following net cash inflows from the two options: EEB Click the icon to view the net cash flows.) Gammon uses straight-line depreciation and requires an annual return of 12%. 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). Year Net Cash Outflows Net Cash Inflows Accumulated Amount Invested Annual 0 $ 800,000 1 2 4 5 6 7 8 (Round your answer to one decimal place.) The payback for Option 1 (refurbish current machine) is years. Now complete the payback schedule for Option 2 (purchase). Gammon Manufacturing, Inc. has a manufacturing machine that needs attention. Amount Invested The payback for Option 1 (refurbish current machine) is Now complete the payback schedule for Option 2 (purchase). Year Net Cash Outflows Net Cash Inflows Annual Accumulated 0 $ 2,100,000 1 2 3 4 5 6 7 8 9 10 (Round your answer to one decimal place.) The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of return) for each of the options. Refurbish + years. (Click the icon to vi ARR % The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of retum) for each of the options. Refurbish Purchase ARR Compute the NPV for each of the options. Begin with Option 1 (refurbish). (Enter the factors to three decimal places. XXXXX Use parentheses or a minus sign for a negative net present value) Net Cash PV Factor Present Years Inflow (i = 12%) Value Present value of each year's inflow: 1 (n=1) 2 (n=2) 3 (n=3) 4 (n=4) 5 (n=5) 6 (n=6) 7 (n=7) 8 (n = 8) Total PV of cash inflows 0 Initial investment Net present value of the project Now Now compute the NPV for Option 2 (purchase). (Enter the factors to three decimal places. X.XXX. Use parentheses or a minus sign for a negative net present value.) Net Cash Years Inflow PV Factor (1=12%) Present value of each year's inflow: 1 (n-1) 2 (n=2) 3 (n=3) 4 (n=4) 5 (n=5) 6 (n=6) 7 (n=7) 8 (n = 8) 9 (n=9) 10 (n=10) Total PV of cash inflows. 0 Initial investment Net present value of the project Present Value Finally, compute the profitability index for each option. (Round to two decimal places XXX.) Refurbish Profitability index 7 (n=7) 8 (n=8) 9 (n=9) 10 (n=10) Total PV of cash inflows 0 Initial investment Net present value of the project (Click the icon to view Future Value of Ondinary Annuity of $1 table) Read the regarements Finally, compute the profitability index for each option. (Round to two decimal places XXX) Profitability index Refurbish Purchase Requirement 2. Which option should Gammon choose? Why? Review your answers in Requirement 1.1 Gammon should choose profitability index is " because this option has a payback period, an ARR that is the other option, a NPV, and its