Gammaro Industries is deciding whether to automate one phase of its production process, The manufacturing equipment has a six-year life and wil cost $920,000. Projected net cash inflows are as follows.

Requirements

1. Compute this project's PV using Gammaro Industries' 14% hurdle rate. Should the company invest in the equipment? Why or why not?
2. Gammaro Industries could refurbish the equipment at the end of six years for $101,000. The refurbished equipment could be used one more year, providing 72,000 of net cash inflows in Year 7. In addition, the refurbished equipment would have a $54,000 residual value at the end of Year 7. Should Gammaro Industries invest in the equipment and refurbish it after six years? Why or why not? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.)

(Ciick the icon to viow the prosent yalue table) (Cickitise iron to view the present value annily tathe) (Cick the icon to view tha future valum table) (Cick the icont to viles the futee valie annuily tatile) Read twa mearingmenty Nat bressent value: Data table Requirements 1. Compute this project's NPV using Gammaro Industries' 14% hurdle rate. Should the company invest in the equipment? Why or why not? 2. Gammaro Industries could refurbish the equipment at the end of six years for $101,000. The refurbished equipment could be used one more year, providing $72,000 of net cash inflows in Year 7 . In addition, the refurbished equipment would have a $54,000 residual value at the end of Year 7. Should Gammaro Industries invest in the equipment and refurbish it after six years? Why or why not? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.)