Requirements

Compute this project's NPV using Algae Industries' $16\%$ hurdle rate. Should

Algae Industries invest in the equipment?

Algae Industries could refurbish the equipment at the end of $6$ years for

$$106,000.$ The refurbished equipment could be used one more year, providing

$$80,000$ of net cash inflows in Year $7.$ Additionally, the refurbished equipment

would have a $$51,000$ residual value at the end of Year $7.$ Should

Algae Industries invest in the equipment and refurbish it after $6$ years? $($Hint:

In addition to your answer to Requirement $1,$ discount the additional cash

outflow and inflows back to the present value.$)$

Projected Net Cash InflowsAlgae Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a $6-$year life and will cost $$880,000.$ Projected net cash inflows are as follows:

View the projected net cash inflows.

Read the requirements.

View the Present Value of $$1$ table.

View the Present Value of Ordinary Annuity of $$1$ table.

Requirement $1.$ Compute this project's NPV using Algae Industries' $16\%$ hurdle rate. Should Algae Industries invest in the equipment?

Use the following table to calculate the net present value of the project. $($Enter any factor amounts to three decimal places,

X$.$XXX$.$ Use parentheses or a minus sign for a negative net present value.$)$