Latham Tools is considering purchasing a completely computerized production equipment to replace its existing labor Intensive equipment. The existing equipment has a net book value of $600.000, a remaining useful life of 4 years and a zero salvage value at that time. If the equipment is sold today, management beleves they would recele $75,000 The new equioment is expected to improve quality, be more efficient and reduce annual operating cost by 320,000$ for each of the next four years. The acquisition cost of the equioment is $1.260,000. The equipment is expected to have a zero salvage after its 4 year expected life. The company uses the straight-line method of deprecation for all of its equipment Management has determined that the required rate of retur for project of this risk is 8%{minimum accounting retum is also 8%) and that the maximum payback period is 3 years Assume a tar rate of 40%. 1. Analyze the project using each of the following quantitatie approaches: net present value, payback period acual accounting rate of retum and discounted paydack period. 2. Based solely on quantitative factors, should Latham undertake this project? Why or why not? 3. What qualitative factors should Latham consider in making this decsion? AVA VY AU 1 2.97 2 TU Z. 3 1. 7 21 [360 OG No M 120 2 13 EN 1 1 11 UME