Weiler Manufacturing, Inc. has a manufacturing machine that needs attention.

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Weilerexpects the following net cash inflows from the two options:

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Weileruses straight$-$line depreciation and requires an annual return of $10\%.$

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Read the requirements.

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$).$

$\backslash$table$[[$Year$,\backslash$table$[[$Net Cash Outflows$],[$Amount Invested$]],$Net Cash Inflows$],[$Annual$,$Accumulated$],[0,2,000,000,,],[1,,,],[2,,,],[3,,,],[4,,,],[5,,,],[6,,,],[7,,,],[8,,,]]$

$($Round your answer to one decimal place.$)$

The payback for Option $1($refurbish current machine$)$ is $$ rears.

Now complete the payback schedule for Option $2($purchase$).$

$\backslash$table$[[$Year$,$Net Cash Outflows,Net Cash Inflows$],[$Amount Invested,Annual,Accumulated$],[0,$$$,3,400,000,,],[1,,],[2,,],[3,,],[4,,],[5,,]]$

More info

The company is considering two options. Option $1$ is to refurbish the current machine at a cost of $$2,000,000.$ If refurbished, Weiler expects the machine to last another eight years and then have no residual value. Option $2$ is to replace the machine at a cost of $$3,400,000.$ A new machine would last $10$ years and have no residual value.

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Data table

$\backslash$table$[[$Year$,,\backslash$table$[[$h Current$],[$hine$]],\backslash$table$[[$Purchase New$],[$Machine$]]],[$Year $1,$$$,1,170,000$$$,1,230,000$