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TIMEWUIK. Week LIGN: Chapter 11: Problems Save in Score: 0 of 1 pt 4 of 5 (0 complete) HW Score: 0%, 0 of 5 pts P26-31A (similar to) Question Help $ Colston Manufacturing, Inc. has a manufacturing mach that needs attention. The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,800,000. If refurbished, Colston expects the machine to last another 8 years and then have no residual value. Option 2 is to replace the machine at a cost of $4,400,000. A new machine would last 10 years and have no residual value. Colston expects the following net cash inflows from the two options: (Click the icon to view the net cash flows.) Colston uses straight-line depreciation and requires an annual return of 14%. (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Present Value of Annuity of $1 table.) Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two options. 2. Which option should Colston choose? Why? 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 ) (0 Year Amount Invested Annual Accumulated 0 $ 1,800,000 TH 1 2 3 4 5 6 7 8 Enter any number in the edit fields and then click Check Answer parts 8 Check Answer Clear All remaining Data Table Year Refurbish Current Purchase New and ./? Machine Machine RR, 1 $ 970,000 $ 3,300,000 500,000 2 . 670,000 by 3 370,000 Cash 4 5 6 240,000 110,000 110,000 110,000 110,000 540,000 410,000 280,000 280,000 280,000 280,000 280,000 280,000 6,600,000 7 8 9 10 Total $ 2,520,000 $ Print Done elds and then click Check Answer Clear All Question Help Reference MI s 0. ok hac lat US Prosent Value of $1 ck am Periods 1 2 3 4 5 1% 0.990 0.980 0.971 0.961 0.951 4% 0.962 0.925 0.889 0.855 0.822 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 5% 0.952 0.907 0.864 0.823 0.784 7% 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 mp nich 9% 0.917 0.842 0.772 0.708 0.650 em 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 atet 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 6 7 8 9 10 0.942 0.933 0.923 0.914 0.905 0.746 0.711 0.677 0.645 0.614 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.630 0.583 0.540 0.500 0.463 r 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 11 12 13 14 15 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.896 0.887 0.879 0.870 0.861 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.429 0.397 0.368 0.340 0.315 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.164 0.150 0.138 0.126 0.116 16 17 18 19 20 12% 14% 15% 16% 18% 20% 0.893 0.877 0.870 0.862 0.847 0.833 0.797 0.769 0.756 0.743 0.718 0.694 0.712 0.675 0.658 0.641 0.609 0.579 0.636 0.592 0.572 0.552 0.516 0.482 0.567 0.519 0.497 0.476 0.437 0.402 0.507 0.456 0.432 0.410 0.370 0.335 0.452 0.400 0.376 0.354 0.314 0.279 0.404 0.351 0.327 0.305 0.266 0.233 0.361 0.308 0.284 0.263 0.225 0.194 0.322 0.270 0.247 0.227 0.191 0.162 0.287 0.237 0.215 0.195 0.162 0.135 0.257 0.208 0.187 0.168 0.137 0.112 0.229 0.182 0.163 0.145 0.116 0.093 0.205 0.160 0.141 0.125 0.099 0.078 0.183 0.140 0.123 0.108 0.084 0.065 0.163 0.123 0.107 0.093 0.071 0.054 0.146 0.108 0.093 0.080 0.060 0.045 0.130 0.095 0.081 0.069 0.051 0.038 0.116 0.083 0.070 0.060 0.043 0.031 0.104 0.073 0.061 0.051 0.037 0.026 0.093 3:064 0.053 0.044 0.031 0.022 0.083 0.056 0.046 0.038 0.026 0.018 0.074 0.049 0.040 0.033 0.022 0.015 0.066 0.043 0.035 0.028 0.019 0.013 0.059 0.038 0.030 0.024 0.016 0.010 0.585 0.557 0.530 0.505 0.481 0.458 0.436 0.416 0.396 0.377 0.359 0.342 0.326 0.310 0.295 0.728 0.714 0.700 0.686 0.673 0.853 0.844 0.836 0.828 0.820 0.811 0.803 0.795 0.788 0.780 0.394 0.371 0.350 0.331 0.312 0.294 0.278 0.262 0.247 0.233 0.339 0.317 0.296 0.277 0.258 0.242 0.226 0.211 0.197 0.184 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.135 0.123 0.112 0.102 0.092 0.292 0.270 0.250 0.232 0.215 0.199 0.184 0.170 0.158 0.146 5 21 22 23 24 25 0.660 0.647 0.634 0.622 0.610 0.538 0.522 0.507 0.492 0.478 0.439 0.422 0.406 0.390 0.375 8 r any Print Done Done Darts emaining 26-31 A (similar to) Question Help Reference hach at a Colston M cost of $ of $4,400, (Click Colston us (Click 3.705 0.564 0.513 6 7 8 9 10 0.837 0.813 0.789 0.766 0.744 0.746 0.711 0.677 0.645 0.614 0.665 0.627 0.592 0.558 0.666 0.623 0.582 0.544 0.508 596 0.547 0.502 0460 0.422 Requirem 1. Comp 2. Which 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 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 0.650 0.625 0.601 0.577 0.555 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 11 12 13 14 15 0.475 0.444 0.415 0.388 0.362 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 Requirem Compute 0.722 0.701 0.681 0.661 0.642 0.623 0.606 0.587 0.570 0.554 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.093 16 17 18 19 20 0.728 0.714 0.700 0.686 0.673 0.339 0.317 0.296 0.277 0.258 0.292 0.270 0.250 0.232 0.215 0.218 0.198 0.180 0.164 0.149 Year 0 0.534 0.513 0.494 0.475 0.456 0.439 0.422 0.406 0.390 0.375 U.. 455 1.432 1.410 0.370 W.336 0.452 0.400 0.376 0.354 0.314 0.279 0.404 0.351 0.327 0.305 0.266 0.233 0.361 0.308 0.284 0.263 0.225 0.194 0.322 0270 0.247 0.227 0.191 0.162 0.287 0.237 0.215 0.196 0.162 0.135 0.257 0.208 0.187 0.168 0.137 0.112 0.229 0.182 0.163 0.145 0.116 0.093 0.205 0.160 0.141 0.125 0.099 0.078 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