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Venu Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $900, Projected net cash inflows are as follows: Click the icon to view the projected net cash inflows.) (Click the icon to view Present Value of S1 table.) (Click the icon to view Prosent Value of Ordinary Annuity of S1 table.) Read the requirements Net Cash Inflow Requirement 1. Compute this project's NPV using Venu's 16% hurdle rate. Should Venu invest in the equipment? Use the following table to calculate the net present value of the project (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a mi a negative net present value.) PV Factor Years -16%) Present Value Year 1 Present value of each year's inflow: (n = 1) Year 2 Present value of each year's Inflow: (n = 2) Year 3 Present value of each year's inflow: (n = 3) Year 4 Present value of each year's inflow: (n = 4) Year 5 Present value of each year's Inflow: (n = 5) Year 6 Present value of each year's inflow: (n = 6) Total PV of cash inflows Year O Initial investment Net present value of the project Venu Industries invest in the equipment Requirement 2. Venu could refurbish the equipment at the end of six years for $106,000. The refurbished equipment could be used one more year, providing $76,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $50,000 residual value at the end of year 7. Should Venu invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Calculate the NPV of the refurbishment . (Enter any factor amounts to three decimal places, X.XXX, Use parentheses or a minus sign for cash outnows and for a negative not present value.) Cash PV Factor ( (outflow linflow 16%) Present Value Refurbishment at the end of Your 6 in #6) Cash inflows in Year 7 (7) Residual value (7) Net present value of the returbishment The refurbishment provides a NPV. The refurbishment NPV is to overcome the original NPV of the equipment. Therefore, the refurbishment alter Venu Industries original decision regarding the equipment Investment Venu Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $900, Projected net cash inflows are as follows: Click the icon to view the projected net cash inflows.) (Click the icon to view Present Value of S1 table.) (Click the icon to view Prosent Value of Ordinary Annuity of S1 table.) Read the requirements Net Cash Inflow Requirement 1. Compute this project's NPV using Venu's 16% hurdle rate. Should Venu invest in the equipment? Use the following table to calculate the net present value of the project (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a mi a negative net present value.) PV Factor Years -16%) Present Value Year 1 Present value of each year's inflow: (n = 1) Year 2 Present value of each year's Inflow: (n = 2) Year 3 Present value of each year's inflow: (n = 3) Year 4 Present value of each year's inflow: (n = 4) Year 5 Present value of each year's Inflow: (n = 5) Year 6 Present value of each year's inflow: (n = 6) Total PV of cash inflows Year O Initial investment Net present value of the project Venu Industries invest in the equipment Requirement 2. Venu could refurbish the equipment at the end of six years for $106,000. The refurbished equipment could be used one more year, providing $76,000 of net cash inflows in year 7. Additionally, the refurbished equipment would have a $50,000 residual value at the end of year 7. Should Venu invest in the equipment and refurbish it after six years? (Hint: In addition to your answer to Requirement 1, discount the additional cash outflow and inflows back to the present value.) Calculate the NPV of the refurbishment . (Enter any factor amounts to three decimal places, X.XXX, Use parentheses or a minus sign for cash outnows and for a negative not present value.) Cash PV Factor ( (outflow linflow 16%) Present Value Refurbishment at the end of Your 6 in #6) Cash inflows in Year 7 (7) Residual value (7) Net present value of the returbishment The refurbishment provides a NPV. The refurbishment NPV is to overcome the original NPV of the equipment. Therefore, the refurbishment alter Venu Industries original decision regarding the equipment Investment

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