Question: Net Cash PV Factor Present Years Inflow (i = 10%) Value Present value of each year's inflow: 1 2 3 4 (n = 1) (n

Net Cash PV Factor Present Years Inflow (i = 10%) Value Present value of each year's inflow: 1 2 3 4 (n = 1) (n = 2) (n = 3) (n = 4) (n = 5) (n = 6) (n = 7) 5 6 IIII 7 8 (n = 8) Total PV of cash inflows 0 Initial investment More info - X Data table The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,200,000. If refurbished. Alton 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 $2,000,000. A new machine would last 10 years and have no residual value. Year Print Done Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Refurbish Current Purchase New Machine Machine $ 900,000 $ 160,000 330.000 590.000 260.000 520,000 190.000 450,000 120,000 380,000 120,000 380,000 120,000 380,000 120.000 380,000 380,000 380,000 Requirements Year 8 Year 9 Year 10 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. 2. Which option should Alton choose? Why? 2,160,000 $ 4,000,000 Total Print Done Print Done Reference Present Value of $1 3% 15% Periods 1% 2% 4% 5% 6% 7% 8% 9% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0,971 0.962 0.952 0.943 0.935 0.925 0.917 0.9090.853 0.877 0.870 0.852 0.847 0.833 Period 2 0.900 0.951 0.943 0.925 0.907 0.850 0.873 0.857 0.842 0.826 0.797 0.769 0.750 0.743 0.7180.664 Perlod 3 0.971 0.942 0.915 0.8890.864 0.840 0.816 0.794 0.772 3.751 0.712 0.675 0.658 0.641 0.609 0.579 Period 4 0.961 0.924 0.088 0.655 0.823 0.752 0.763 0.735 0.708 0.683 0.636 0.592 0.572 0.562 0.518 0.482 Period 5 0.961 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 Period 6 0.942 0.888 | 0.837 0.750 0.745 0.705 0.665 0.630 0.556 0.564 0.507 1.456 0.432 0.410 0.370 0.335 Period 7 0.963 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 Perlod 8 0.923 0.853 0.789 0.7310 677 0.627 0.582 0.540 0.5C2 0.467 0.404 0.351 0.327 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.552 0.544 0.500 0.460 0.424 0.361 0.308 0.284 0.283 0.225 0.194 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.503 0.463 0.422 0.386 0.322 0.2700247 0.227 0.19 0.162 Period 11 0.895 0.8040.722 0.650 0.585 0.527 01.475 0.429 0.388 3.350 0.287 1.237 0.215 0.1950.162 0.185 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.257 0.209 0.187 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 3.290 0.229 0.182 0.163 0.145 0.116 0.093 Period 14 0.870 0.750 0.661 0.5770505 0.442 0.388 0.340 0.299 0.263 0.205 0.160 0.141 0.125 0.089 0.078 Period 15 0.861 0.743 0.642 0.556 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.064 0.065 Period 16 0.853 0.7280.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 Period 17 0.844 0.714 0.605 0.513 0.438 0.371 0.317 0.270 0.231 0.1980.146 0.100 | 0.093 0.000 0.000 0.045 Period 18 0.836 0.700 0.587 0.484 0.416 0.350 0.295 0.250 0.212 0.180 0.130 | 0.095 0.081 0.059 0.061 0.038 Period 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.031 Period 20 0.820 0.673 0.554 0.456 0.377 0.3120.258 0.215 0.178 0.149 0.104 0.073 0.051 0.051 0.007 0.026 Perlod 21 0811 DAN L 0528 439 10350 24 1242 1199 0164 113 ones 064 0053 111 1122 Print Done Future Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15 1% 2% 3% 5% 6% 7% 8% 9% 10% 12% 14% 15% 1,010 1.020 1.030 1.040 1.050 1.060 1.070 1080 1.090 1.100 1.120 1.140 1.150 1.020 1.040 1.061 1.0821.103 1.1241.145 1.166 1.1881.210 1.254 1.300 1.323 1.000 1.081 1.093 1.125 1.158 1.191 1.225 1.260 1.295 | 1.331 1.405 1.482 1.521 1.041 1.0821.126 1.1701216 1.2621.311 1.360 1.412 | 1.464 1.574 1.689 1.749 1.061 1.104 1.159 1.217 1.276 1.338 1.403 1.469 1.539 1.611 1.762 1.925 2.011 1.062 1.126 1.194 1.235 1340 1.419 1.501 1.587 1.677 1.772 1.974 2.1952.313 1.072 1.149 1.230 1.316 1.407 1.5041.606 1.714 1.828 1.949 2.211 2.502 2660 1.083 1.1721.267 1.359 1.4771.594 1.718 1.951 1.993 2.144 | 2.476 2.853 3.059 1.094 1.195 1.305 1.423 1551 1.689 1.838 1.999 2.172 2.3582.773 3.252 3.518 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2.367 2.594 3.106 3.707 4.046 1.116 1.243 1.384 1.539 1.710 1.898 2.105 2.332 2.580 2.853 3.479 4.225 4.652 1.127 1.268 1.426 1.601 1.796 2.012 2.252 2.518 2.813 3.138 3.896 4.818 5.350 1.138 1.294 1.469 1.665 1.886 2.133 2.410 2.720 3.068 3.452 4.363 5.492 6.153 1.149 1.319 1.513 1.732 1.980 2.261 2.579 2.937 3.342 3.79 4.887 6.261 7.076 1.161 1.346 1.558 1.801 2.079 2.397 2.759 3.172 3.642 4.177 5.474 7.1388.137 1.173 1.373 1.605 1.873 2.183 2.540 2.952 3.426 3.970 | 4.595 6.130 8.1379.358 1.184 1.400 1.653 1.948 2.292 2.693 3.159 3.700 4.328 5.0546.966 9.276 10.76 1.198 1428 1.702 2.026 2407 2.854 3.380 3.996 4.717 5.580 7.690 10.58 12.38 1.208 1.4571.754 2.107 2.527 3.026 3.617 4.316 5.142 6.116 8.613 12.06 14.23 1.220 1.486 1.608 2.1912.653 3.207 3.870 4.581 5.6046.727 9.846 13.74 16.37 1.232 1.516 1.860 2.279 2.78 3.400 4.141 5.034 6.1097.400 10.80 15.67 18.82 1.245 1.546 1.916 2.370 2.925 3.604 4.430 5.437 6.659 8.140 12.10 17.88 21.64 1.257 1.5771.9742.435 3.0723.620 4.741 5.971 7.250 0.954 13.55 20.33 24.89 1.270 1.608 2.033 2.563 3.225 4.049 5.072 6.341 7.911 9.850 15.18 23.2128,63 1.282 1.641 2.094 2.656 3.386 4.292 5.427 6.848 8.623 10.83 17.00 26.46 | 32.92 Period 16 Period 17 Period 18 Period 19 Period 20 Period 21 Period 22 Period 23 Period 24 Period 25 Period 26 1.295 1.373 2.157 2.772 1 3.558 4.549 5.807 7.396 9.399 11.92 | 19.04 30.17 37.86 Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 8 Period 7 Period 8 Period 9 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15 Future Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 1.000 1.000 1.000 1.000 1.000 1.OCO 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.010 2020 2.030 2.040 2.050 2.080 2.070 2.000 2.000 2.100 2.120 2.140 2.150 3.030 3.060 3.091 3.122 3.153 3.184 3.215 3.246 3.278 3.310 3.374 3.440 3.473 4.080 4.122 4.184 | 4.243 4.310 4.375 4.440 4.506 | 4.573 4.841 4.779 | 4.921 4.963 5.101 5.204 5.309 5.416 5.526 5.637 5.751 5.8675.985 6.105 6.353 6.610 6.742 6.152 6.308 6.468 3.633 3.802 6.975 7.153 7.3367.523 7.716 8.115 0.538 8.754 7.214 7434 7.662 7.8938.142 8.394 8.654 8.9239.2009.487 10.09 10.73 11.07 8.286 8.583 8.0929.214 9.549 9.057 10.260 10.84 11.03 11.44 12.30 13 23 13.73 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 14.78 16.09 16.79 10.46 10.95 11.46 1201 1258 13.18 13.82 14.49 15.1915.94 17.55 1934 | 20.30 11.57 12.17 12.81 13.49 14.21 14.97 15.78 16.65 1756 18.53 20.65 23.0424.35 12.58 13.41 14,19 1503 15.92 15.87 17.8918.98 20.14 21.38 24.13 | 27 2729.00 13.81 14.68 15.62 16.63 17.71 19.88 20.14 21.50 22.95 24.52 28.03 32.09 34.35 14.95 15.97 17.0918 29 19.60 21.02 22.55 24.21 26.02 27.98 32.39 37 58 | 40.50 16.10 17.29 19.60 20.02 21.53 23.28 25.13 27.15 2936 31.77 37.2843.84 47.58 17.26 18.54 20.16 21.822365 25.67 27.89 30.32 33.00 35.95 42.75 50.98 55.72 18.43 20.01 21.76 23.70 25.84 29.21 30.84 33.75 36.97 40.54 48.88 59.12 65.08 19.61 21.41 23.41 2565 28 13 30.91 34.00 37.45 | 4130 45.60 55.7568.39 75.84 20.81 22.84 25.12 27.67 30.54 33.76 37.38 41.45 | 46.02 51.16 3.44 | 78.97 89.21 22.02 24.30 26.87 29.7833.07 36.79 41.00 45.76 51.16 57.28 72.05 91.02 1024 23.24 25.78 29.68 31.9735.72 33.99 44.87 50.42 56.76 64.00 81.70 104.8 118.8 24.47 27.30 30.5434.25 38.51 43.39 49.01 55.46 62 87 71.40 92.50 1204 137.6 25.72 28.95 32.45 36.62 41.4347.CO 53.44 60.89 89 53 79.54 104.6 138.3 159.3 26.97 30.42 34.43 39.08 | 44.50 53.82 58.18 66.76 76.79 | 88.50 118.2 | 158.7 | 1842 28.24 32.03 33.46 | 41.65 47.73 54.86 63.25 73.104.70 98.35 133.3 181.9 2128 29.53 33.67 38.55 44.31 / 51.11 59.16 68.68 | 79.95 93 32 109.2 150.3 208.3 1 245.7 Period 16 Period 17 Period 18 Period 19 Period 20 Period 21 Period 22 Period 23 Period 24 Period 25 Period 26 Present Value of Ordinary Annuity of S1 Perlocs 1% 2% 3% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.986 1.859 1.933 1.800 1.783 1.759 1.736 1.6901.647 1.526 1.605 1.566 1.528 Period 3 2.9412.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 | 2.487 2.402 2.322 2.283 2.246 2.174 2.106 Period 4 3.902 3.008 3.717 3.530 3.546 3.485 3.387 3.312 3.240 3.170 3.037 2.914 2.855 2.798 2.650 2.589 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.27 2.991 period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.488 4.355 4.111 3.8893.784 3.685 3.4083.526 Period 7 6.728 6.472 8.230 6.002 5.786 5.582 5.389 5.20 5.003 4.968 4.5844.288 4.160 4.039 3.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.7475.535 5.335 4.9684.639 | 4.487 4.344 4.078 3.837 Period 9 8.586 | 8.162 7.783 7.435 7.106 6.002 6.515 3.247 5.995 5.759 5.329 4.943 4.772 4.607 4.300 4.001 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.6505.216 5.019 4.833 4.494 4.192 Period 11 10.368 9.787 9.253 8.750 8.306 7.887 7.499 7.139 5.805 6.495 5.9385.453 5.234 5.029 4.656 4.327 Period 12 11.255 10.575 3.964 9.385 8.863 8.384 7.3437.538 7.1616.914 6.1945.680 5.421 5.197 4.753 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.9047.487 7.103 6.424 5.8425.583 5.342 4.910 4.533 Period 14 13.004 12.106 11.296 10.563 9.699 9.295 8.745 9.244 7.783 7.3876.629 8.002 5.724 5.468 5.006 4.611 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.569 8.061 7.6066.811 6.142 5.847 5.575 5.092 4.675 Period 16 14.718 13.57812.561 11.652 10.833/10.106 94478.851 8.313 7.824 6.974 5.265 5.954 5.669 5.1624.730 Period 17 15.562 14.292 13.166 12.166 11.27410.4771 9.763 9.122 0.5448.022 7.120 6.373 6.047 5.749 5.222 4.775 Period 18 16.398 14.002 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.4676.128 5.818 5.273 4.812 Period 19 17.226 15.678 14.32413.134 12.065 11.150 10.336 9.604 0.950 8.385 7.388 3.560 6.198 5.877 5.316 4.844 Period 20 18.046 16.351 14.877 13.560 12.462 11.470-0.5949.818 9.129 8.5147.469 6.623 6.259 5.9295.353 4.870 Period 21 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.549 7.562 5.687 6.3125.973 5.384 | 4.891 Period 22 19.660 17.658 15.967 14.451 13.163 12.042 11.081 10.2019.442 8.772 7.645 6.743 6.359 6.011 5.410 4.909 Period 23 20.456 18.292 16.444 14.857 13.489 12.303) 11.272 10.371 9.5808.883 7.718 6.792 6.399 6.044 5.432 4.925 Period 24 21.24318.914 16.908 15.247 13.799 12.550 11.489 10.529 9.707 8.905 7.784 8.635 6.434 8.073 5.451 4.967 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.8239.077 7.813 6.8736.464 6.097 5.467 4.948 Period 26 122.795 20.121 17.877 15.983 14.375113.003) 11.825 10.81019.929 9.151 7.895 5.9086491 6.118 5.480 4.968

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