This one is quite difficult

The company is considering two options. Option 1 is to refurbish the current machine at a cost of $2,600,000. If refurbished, Mandel 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 $3,200,000. A new machine would last 10 years and have no residual value. Data table Mandel Manufacturing, Inc. has a manufacturing machine that needs attention. (Click the icon to view additional information.) Mandel expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Mandel uses straight-line depreciation and requires an annual return of 12%. Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. Compute the payback for both options. Begin by completing the payback schedule for Option 1 (refurbish). (Round your answer to one decimal place.) The payback for Option 1 (refurbish current machine) is years. Now complete the pavback schedule for Option 2 (purchase). The payback for Option 2 (purchase new machine) is years Compute the ARR (accounting rate of return) for each of the options. Refurbish Purchase Compute the NPV for each of the options. Begin with Option 1 (refurbish). (Enter the factors to three decima present value.) 7(n=7) 8(n=8) Total PV of cash inflows 0 Initial investment Net present value of the project Now compute the NPV for Option 2 (purchase). (Enter the factors to three decimal places. XXXX Use 9(n=9) 10(n=10) Total PV of cash inflows 0 Initial investment Net present value of the project Why? Mandel should choose NPV and its profitability index is because this opron has a paybnok period an ARR that is e other cobon. a