Question: Question 6 (based on Chapters 5 and 6) Triton Metals is considering an expansion of its existing operations, which would require a purchase of a
Question 6 (based on Chapters 5 and 6) Triton Metals is considering an expansion of its existing operations, which would require a purchase of a new machine, MACHINE A. While the life of the expansion is indefinite, the machine has a useful life of 5 years and is expected to be replaced every 5 years with a new one of the same type. The incremental net cash flows from the expansion are listed in the table below. Assume 12% cost of capital. Please include written answers to all parts of the problem in a text box at the bottom of your Excel sheet. Year Cash Flow 0 -60,000 1 15,000 2 20,000 3 20,000 4 20,000 5 10,000 a) Use the present worth method to determine whether the expansion should be undertaken or not. Use the NPV function. Explain why you determined to accept/reject the expansion. b) Use the annual worth method to determine whether the expansion should be undertaken. Use the PMT function. Again, explain your answer. c) Use the internal rate of return method to determine whether the expansion should be undertaken. Use the IRR function. Again, explain your answer. d) Assume that an alternative machine model becomes available, MACHINE B, with the incremental net cash flows given below. Its useful life is 6 years, and it would be replaced every 6 years with a new machine of the same type, if purchased for the expansion project. Use the equivalent annual worth method to determine which of the two available machines should be selected for the project. Do not worry about accepting or rejecting the expansion itself, your task is only to determine which of the two machines should be used. Explain your answer. Year Cash Flow 0 -75,000 1 10,000 2 15,000 3 20,000 4 25,000 5 25,000 6 20,000 Trine University, Spring 2021, Dr. Kolar Page 4 Question 7 (based on Chapter 7) BrickTon Cement Inc. is considering launching a new product. Us
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