x Latium Tools is considering purchasing a completely computerized production equipment to replace its ehtinyt laboritve cent. The extinguipment has a netbook value of $600,000, a remaining useful life of 4 years, and a zero salvage value that time the equipment is sold today, management believes they would receive $75.000 The new eth expected to improve quality be more efficient and reduce annual operating costs by 320,000 for each of the next four years. The acquisition cost of the equipment is $1.260,000. The gument is expected to have a zero salvage valiti year expected life. The compares the straight line method of deprecation for all of its equipment Management for determined that the required rate of return for projects of this tik e dininimum accounting return is also and that the munimum payback period is 3 years. As a tax rate of 40% 1. Analyto the project uning each of the following quantitative approaches et presentator ayback period, anal counting rate of return and discounted payback period 2. Besed solely on quantitative action should tattum undertake this project? Wiry or why not? 3. Wut qualitative factors should Latham comer in making this decision? PV of $1 7336 V of $1 Period 1 1080 1.166 1.260 4 1.300 5 1469 1587 7 1734 1851 1.999 10 11 2.332 2.518 13 2.720 2.937 15 3.102 le 3426 12 1700 1996 4.316 30 4.661 0.925 0.852 0.794 0.735 0.48 0.630 0.500 0540 OLSO 0463 0.429 0.397 0.36 0.340 0.315 0292 0270 0250 0.232 0215 PV Andy PVA 83 B% 1.000 0.926 2.000 1.783 3.246 2.577 4506 3.312 5.667 2.993 4623 3.923 5.206 10.637 5.747 12.488 6.247 14.487 6.710 16.645 18.977 7.536 21495 7.904 24215 8.24 27.152 8559 30.324 8.85 33.750 9.122 37.450 9372 41.446 9.601 9.812 7.139 45.762 x Latium Tools is considering purchasing a completely computerized production equipment to replace its ehtinyt laboritve cent. The extinguipment has a netbook value of $600,000, a remaining useful life of 4 years, and a zero salvage value that time the equipment is sold today, management believes they would receive $75.000 The new eth expected to improve quality be more efficient and reduce annual operating costs by 320,000 for each of the next four years. The acquisition cost of the equipment is $1.260,000. The gument is expected to have a zero salvage valiti year expected life. The compares the straight line method of deprecation for all of its equipment Management for determined that the required rate of return for projects of this tik e dininimum accounting return is also and that the munimum payback period is 3 years. As a tax rate of 40% 1. Analyto the project uning each of the following quantitative approaches et presentator ayback period, anal counting rate of return and discounted payback period 2. Besed solely on quantitative action should tattum undertake this project? Wiry or why not? 3. Wut qualitative factors should Latham comer in making this decision? PV of $1 7336 V of $1 Period 1 1080 1.166 1.260 4 1.300 5 1469 1587 7 1734 1851 1.999 10 11 2.332 2.518 13 2.720 2.937 15 3.102 le 3426 12 1700 1996 4.316 30 4.661 0.925 0.852 0.794 0.735 0.48 0.630 0.500 0540 OLSO 0463 0.429 0.397 0.36 0.340 0.315 0292 0270 0250 0.232 0215 PV Andy PVA 83 B% 1.000 0.926 2.000 1.783 3.246 2.577 4506 3.312 5.667 2.993 4623 3.923 5.206 10.637 5.747 12.488 6.247 14.487 6.710 16.645 18.977 7.536 21495 7.904 24215 8.24 27.152 8559 30.324 8.85 33.750 9.122 37.450 9372 41.446 9.601 9.812 7.139 45.762