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Kilmer Manufacturing, Inc. has a manufacturing machine that needs attention (Click the icon to view additional information.) Kilmer expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Kilmer uses straight-line depreciation and requires an annual return of 18% (Click the icon to view Present Value of $1 table) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) 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). Net Cash Outflows Net Cash Inflows Year Amount invested Annual Accumulated 1,600,000 1 2 3 4 5 6 7 8 (Round your answer to one decimal place) Read the requirements. profitabil wyback sc More Info - The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,600,000. If refurbished, Kilmer 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 $4,200,000. A new machine would last 10 years and have no residual value. Print Done w Future Data Table w Future Year Refurbish Current Purchase New Machine Machine x of th 1 3,120,000 490,000 $ $ for Opl 2 550,000 3 410,000 270,000 4 680,000 540,000 400,000 260,000 260,000 260,000 130,000 5 6 130,000 130,000 7 130,000 8 260,000 260,000 260,000 9 10 $ 6,300,000 2,240,000 $ Total Print Done X Reference n On Present Value of $1 re Periods 1 2 3 4 5 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.884 0.823 0.784 0.877 0.769 0.675 0.592 0.519 15% 0.870 0.756 0.658 0.572 0.497 16% 0.862 0.743 0.641 0.552 0.476 20% 0.833 0.694 0.579 0.482 0.402 ER 18% 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 6 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.432 0.376 0.327 0.284 0.247 0.335 0.279 0.233 0.194 0.162 asil 9 10 0.162 0.137 11 12 13 14 15 2% 3% 0.980 0.971 0.961 0.943 0.942 0.915 0.924 0.888 0.906 0.863 0.888 0.837 0.871 0.813 0.853 0.789 0.837 0.766 0.820 0.744 0.804 0.722 0.788 0.701 0.773 0.681 0.758 0.661 0.743 0.642 0.728 0.623 0.714 0.605 0.700 0.587 0.686 0.570 0.673 0.554 0.660 0.538 0.647 0.522 0.634 0.507 0.622 0.492 0.610 0.478 6% 7% 8% 9% 0.943 0.935 0.926 0.917 0.890 0.873 0.857 0.842 0.840 0.816 0.794 0.772 0.792 0.763 0.735 0.708 0.747 0.713 0.681 0.650 0.705 0.666 0.630 0.596 0.665 0.623 0.583 0.547 0.627 0.582 0.540 0.502 0.592 0.544 0.500 0.460 0.558 0.508 0.463 0.422 0.527 0.475 0.429 0.388 0.497 0.444 0.397 0.356 0.469 0.415 0.368 0.326 0.442 0.388 0.340 0.299 0.417 0.362 0.315 0.275 0.394 0.339 0.292 0.252 0.371 0.317 0.270 0.231 0.350 0.296 0.250 0.212 0.331 0.277 0.232 0.194 0.312 0.258 0.215 0.178 0.294 0.242 0.1995.164 0.278 0.226 0.184 0.150 0.262 0.211 0.170 0.138 0.247 0.197 0.158 0.126 0.233 0.184 0.146 0.116 10% 12% 0.909 0.893 0.826 0.797 0.751 0.712 0.683 0.636 0.621 0.567 0.564 0.507 0.513 0.452 0.467 0.404 0.424 0.361 0.386 0.322 0.350 0.287 0.319 0.257 0.290 0.229 0.263 0.205 0.239 0.183 0.218 0.163 0.198 0.146 0.180 0.130 0.164 0.116 0.149 0.104 0.135 0.093 0.123 0.083 0.112 0.074 0.102 0.066 0.092 0.059 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.135 0.112 0.093 0.078 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.650 0.585 0.625 0.557 0.601 0.530 0.577 0.505 0.555 0.481 0.534 0.458 0.513 0.436 0.494 0.416 0.475 0.396 0.456 0.377 0.439 0.359 0.422 0.342 0.406 0.326 0.390 0.310 0.375 0.295 0.116 0.065 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.053 0.046 0.040 0.035 0.030 0.099 0.084 0.071 0.060 0.051 0.043 0.037 16 17 18 19 20 21 22 23 24 25 0.853 0.844 0.836 0.828 0.820 0.811 0.803 0.795 0.788 0.780 0.054 0.045 0038 0.031 0.026 0.064 0.056 0.049 0.043 0.038 0.044 0.038 0.033 0.028 0.024 0.031 0.026 0.022 0.019 0.016 1014 0.022 0.018 0.015 0.013 0.010 777 00 MAGA nes 101 17 126 ARA 22 ne - nth Print Done ond $1 ire Periods 18% 1 1t: 0.943 N 3 4 5 ER 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 6 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 4.303 4.494 y 7 as! 16% 0.862 1.605 2.246 2.798 3.274 3.685 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 5.575 5.669 5.749 5.818 5.877 5.929 8 9 10 Present Value of Ordinary Annuity of $1 1% 2% 3% 5% 6% 7% 8% 9% 10% 12% 14% 0.990 0.980 0.971 0.962 0.952 0.935 0.926 0.917 0.909 0.893 0.877 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2487 2.402 2.322 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 4.853 4.713 4.580 4.452 4.329 4212 4.100 3.993 3.890 3.791 3.605 3.433 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 328 4.946 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.0617.606 6.811 6.142 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 18.046 16.351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.469 6.623 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.687 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.2019.442 8.772 7.645 6.743 20456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 7.718 6.792 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 | 9.707 8.985 7.784 6.835 22.023 19.523 17.413 | 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 13 706 704 47 077 45.00 12.02 44 00 noun non 700C enne 11 12 13 14 15 16 17 18 19 20 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.198 6.259 6.312 6.359 6.399 6.434 6.464 4.656 4.793 4.910 5.008 5.092 5.162 5.222 5.273 5.316 5.353 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.844 4.870 4891 4.909 21 22 23 24 25 5.973 6.011 6.044 6.073 6.097 5.384 5.410 5.432 5.451 5.467 4.925 4.937 4.948 14276 ni Ant 6.140 6.40 A ne Anni ne two Future Value of $1 n ann Periods Inuit 1 2 3 4 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1217 5% 1.050 1.103 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 7% 1.070 1.145 1.225 1.311 1.403 9% 1.090 1.188 1.295 1.412 1.539 10% 1.100 1.210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 15% 1.150 1.323 1.521 1.749 2.011 e NPV 6 mpletir 7 1.062 1.072 1.083 1.094 1.105 8 9 10 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.340 1.407 1.477 1551 1.629 flows 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.772 1.949 2.144 2.358 2.594 2.195 2.502 2.853 3.252 3.707 .ccumu 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 1.677 1.828 1.993 2.172 2.367 1.580 2813 3.066 3.342 3.642 1.974 2211 2476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 2.313 2.660 3.059 3.518 4.046 4.652 5.350 6.153 7.076 8.137 11 12 13 14 15 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.384 1.426 1.469 1.513 1.558 8% 1.080 1.166 1.260 1.360 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 3.426 3.700 3.996 4.316 4.661 5.034 5.437 5.871 2.105 2.252 2.410 2.579 2.759 1.710 1.796 1.886 1.980 2.079 2.183 2.292 2.407 2.527 2.653 4.226 4.818 5.492 6.261 7.138 16 17 18 19 20 1.373 1.400 1.428 1.457 1.486 1.605 1.653 1.702 1.754 1.806 1.873 1.948 2.026 2.107 2.191 1.898 2.012 2.133 2.261 2.397 2.540 2.693 2.854 3.026 3.207 3.400 3.604 3.820 4,049 4.292 3.970 4.328 4.717 5.142 5.604 1.173 1.184 1.196 1.208 1.220 1.232 1.245 1.257 1.270 1.282 6.130 6.866 7.690 8.613 9.646 2.853 3.138 3.452 3.798 4.177 4.595 5.054 5.560 6.116 6.727 7.400 8.140 8.954 9.850 10.83 8.137 9.276 10.58 12.06 13.74 2.952 3.159 3.380 3.617 3.870 4.141 4.430 4.741 5.072 5.427 9.358 10.76 12.38 14.23 16.37 18.82 21.64 24.89 28.63 32.92 21 22 23 24 25 1.516 1.546 1.577 1.608 1.641 1.860 1.916 1.974 2.033 2.094 2.279 2.370 2.465 2,563 2.666 2.786 2.925 3.072 3.225 3.386 6.109 6.659 7.258 7.911 8.623 10.80 12.10 13.55 15.18 17.00 15.67 17.86 20.36 23.21 26.46 6.341 6.848 26 ONE 1672 167 779 9 EEA ARA On? 7.30 1602 307 27 0 Periods 7% 1 2 3 4 5 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.46 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 12% 1.000 2.120 3.374 4.779 6.353 14% 15% 1.000 1.000 2.140 2.150 3.440 3.473 4.921 4.993 6.610 6.742 8.536 8.754 10.73 11.07 13.23 13.73 16.09 16.79 19.34 20.30 6 7 8 6.468 7.662 8.892 10.16 11.46 10% 1.000 2.100 3.310 4.641 6.105 7.716 9.487 11.44 13.58 15.94 18.53 21.38 24.52 27.98 31.77 9 6.308 7.434 8.583 9.755 10.95 12.17 13.41 14.68 15.97 17.29 10 11 12 13 14 15 11.57 12.68 13.81 14.95 16.10 Future Value of Ordinary Annuity of $1 4% 5% 6% 8% 9% 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2.050 2.060 2.070 2.080 2.090 3.122 3.153 3.184 3.215 3.246 3.278 4.246 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 6.633 6.802 6.975 7.153 7.336 7.523 7.898 8.142 8.394 8.654 8.923 9.200 9.214 9.549 9.897 10.260 10.64 11.03 10.58 11.03 11.49 11.98 12.49 13.02 12.01 12.58 13.18 13.82 14.49 15.19 13.49 14.21 14.97 15.78 16.65 17.56 15.03 15.92 16.87 17.89 18.98 20.14 17.71 18.88 20.14 21.50 22.95 18.29 19.60 21.02 22.55 24.21 26.02 20.02 21.58 23.28 25.13 27.15 29.36 21.82 23.66 25.67 27.89 30.32 33.00 23.70 25.84 28.21 30.84 33.75 36.97 25.65 28.13 30.91 34.00 37.45 41.30 27.67 30.54 33.76 37.38 41.45 46.02 29.78 33.07 36.79 41.00 45.76 51.16 31.97 35.72 39.99 44.87 50.42 56.76 34.25 38.51 43.39 49.01 55.46 62.87 36.62 41.43 47.00 53.44 60.89 69.53 39.08 44,50 50.82 58.18 66.76 76.79 41.65 47.73 54.86 63.25 73.11 84.70 A4 21 51.11 50.16 40.00 70.06 0932 12.81 14.19 15.62 17.09 18.60 16.63 8.115 10.09 12.30 14.78 17.55 20.65 24.13 28.03 32.39 37.28 42.75 48.88 55.75 63.44 72.05 23.04 27.27 32.09 37.58 43.84 24.35 29.00 34.35 40.50 47.58 55.72 65.08 75.84 88.21 102.4 16 17 18 19 20 17.26 18.43 19.61 20.81 22.02 20.16 21.76 23.41 25.12 26.87 35.95 40.54 45.60 51.16 5728 50.98 59.12 68.39 78.97 91.02 18.64 20.01 21.41 22.84 24.30 25.78 27.30 28.85 3042 32.03 21 22 23 24 25 23.24 24.47 25.72 26.97 28.24 28.68 30.54 32.45 34.43 36.46 64.00 71.40 79.54 88.50 98.35 81.70 92.50 104.6 118.2 133.3 104.8 120.4 138.3 158.7 181.9 118.8 137.6 159.3 184.2 212.8 90 62 22.67 20 56 100 1602 2002 2467 Read the requirements. ability index of these two options. SCI - Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. 2. Which option should Kilmer choose? Why? Print Done Kilmer uses straight-line depreciation and requires an annual return of 16%. 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). Net Cash Outflows Net Cash Inflows Year Amount Invested Annual Accumulated 0 $ 1,600,000 2 6 7 8 (Round your answer to one decimal place.) Then when for Onlinn fhich nennt marine Choose from any list or enter any number in the input fields and then continue to the next question. The payback for Option 1 (refurbish current machine) is years. Now complete the payback schedule for Option 2 (purchase). Net Cash Outflows Net Cash Inflows Year Amount Invested Annual Accumulated O $ 4,200,000 1 2 3 4 oh 6 N 8 9 10 The payback for Option 2 (purchase new machine) is years. Compute the ARR (accounting rate of return) for each of the options. ARR Refurbish % % Purchase Compute the NPV for each of the options. Begin with Option 1 (refurbish) (Enter the factors to three decimal places. X.XX. Use parentheses or a minus sign Compute the NPV for each of the options. Begin with Option 1 (refurbish). (Enter the factors to three decimal places Net Cash Present PV Factor (i = 16%) Years Inflow Value 1 2 3 Present value of each year's inflow: (n = 1) (n=2) (n = 3) (n = 4) (n = 5) (n = 6) (n = 7) 4 DIRITTI 5 6 7 8 (n = 8) Total PV of cash inflows 0 Initial investment Net present value of the project Nini romnu to the NPV for Ontinn Innerchaeol Entor thn font Net Cash Present PV Factor (i = 16%) Years Inflow Value 1 2 3 4 Present value of each year's inflow: (n = 1) (n=2) (n = 3) (n = 4) (n = 5) (n = 6) (n = 7) (n = 8) (n=9) 5 6 7 8 HII 9 10 (n = 10) Total PV of cash inflows 0 Initial investment Net present value of the project Finally, complete profitability index for each option (Round to two decimal places XXX) Profitability index Roubish Purchase Requirement 2. Which option should Kilmer choose? Why? Review your answers in Requirement Kiner shou choose because this option has a payback period, an ARR that is the other option NPV, and its profitability index is Choose from any list or enterary number in the input fields and then continue to the next

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