is Waterways Continuing Problem 12 CALCULATOR FULL SCREEN Your answer is partially correct. Try again 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 credits 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 Goglave comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require contrabile mantenance. The bache 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 $201.970 Salvage value now $42,100 Investment in major overhaul needed in next year $55.449 Salvage value in 8 years 315,300 $80,000 Remaining life 8 years years Net cash flow generated each year $30,300 143,000 Cochere to view.P.table, (e) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment for the old machine, the initial investment is the cost of the overhaul. Ture 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, se decimal places as displayed in the factor table preview the rest value is negative, se either a negative sin preceding the number eg 45 or parentheses (45). Hound final answer to decimal places 3,275.) 188.900 en Assignment CALCULATOR FULL SCREEN PRINTER VERSION OURCES New Backhoes Old Backhoes Net Present Value 139377 139377 Study buy Now Backhoes Waterways should equipment (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, ... 1.28) New Backhoes Old Backhoes Payback Period 1.27 years years Waterways should retin Old Back equipment (3) Comparing the profitability index for each choice. (Round answers to 2 decimal places, ... 1.25) New Backhoes old Backhoes Profitabindex Waterways should retain Old Boss equipment Assignment CES CALCULATOR FULL (3) Comparing the profitability Index for each choice. (Round answers to 2 decimal places, e.g. 1.25) New Backhoes Old Backhoes Profitability Index 1.23 3.55 udy 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, e.g. 5.27647.) New Backhoes Old Backhoes IRR Factor 25% 58% (1) Comparing the internal rate of return for each choice to the required 8% discount rate. retain Old Backhoes Waterways should equipment LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT Question Attempts: 1 of 3 used