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Business, 05.05.2020 22:24 PLEASEHELP4528

Manufacturing, Inc. has a manufacturing machine that needs attention. The company is considering two options. Option 1 is to refurbish the current machine at a cost of $1,200,000. If refurbished, Kilmer 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 $4,000,000. A new machine would last 10 years and have no residual value. Kilmer expects the following net cash inflows from the two options:.Years Refurbish Current Machine Purchase New Machine1 $100,000 $2,250,0002 $440,000 $650,0003 $340,000 $550,004 $240,000 $450,0005 $140,000 $350,0006 $140,000 $350,0007 $140,000 $350,0008 $140,000 $350,0009 $350,00010 $350,000Total $1,680,000 $6,000,000Kilmer uses straight-line depreciation and requires an annual return of 10%.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).

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