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IN The Ayayai Company is planning to purchase $553.000 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment Projected Cash Year Flows 1 $201.000 2 151,000 3 101.000 4 80,000 5 80,000 41.000 7 41,000 Total $695,000 6 (a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year, Payback period years and months (b) if Ayayal requires a payback period of 4 years or less, should the company make this investment? The company make this investment APPENDIX 9.1 Present value of Sl received in n periods. Periods 4% 5% 6% 8% 9% 10% 11% 13% 14% 20% 1 2 3 4 0.9615 0.9246 0.8890 0.8548 0.8219 0.9524 0.9070 0.8638 0.8227 0.7835 0.9434 0.8900 0.8396 0.7921 0.7473 7% 0.9346 0.8734 0.8163 0.7629 0.7130 0.9259 0.8573 0.7938 0.7350 0.6806 0.9174 0.8417 0.7722 0.7084 0.6499 0.9091 0.8264 0.7513 0.6830 0.6209 0.9009 0.8116 0.7312 0.6587 0.5935 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.8850 0.7831 0.6931 0.6133 05428 0.8772 0.7695 0.6750 0.5921 0.5194 16' 0.8621 0.7432 0.6407 0.5523 0.4761 18% 0.8475 0.7182 0.6086 0.5158 0.4371 0.8333 0.6944 0.5787 0.4823 0.4019 5 6 7 8 9 10 0.7903 0.7462 0.7050 0.7599 0.7107 0.6651 0.7307 0.6768 0.6274 0.7026 0.6446 0.5919 0.6756 0.6139 0.5584 0.6663 0.6302 0.6227 0.5835 0.5820) 0.5403 0.5439 0.5002 0.5083 0.4632 0.5963 0.5470 0.5019 0.4604 0.4224 0.5645 0.5132 0.4665 0.4241 0.3855 0.5346 0.4817 0.4339 0.3909 0.3522 0.5066 0.4523 0.4039 0.3606 0.3220 0.4803 0.4556 0.4251 0.3996 0.3762 0.3506 0,3329 0.3075 0.29460.2697 0.4104 0.3538 0.3050 0.2630 0.2267 0.3704 0.3139 0.2660 0.2255 0.1911 0.3349 0.2791 0.2326 0.1938 0.1615 11 12 13 14 15 0.6496 0.6246 0.6006 0.5775 0.5553 0.5847 0.5568 0.5303 0.5051 0.4810 0.5268 0.4970 0.4688 0.4423 0.4173 0.4751 0.4289 0.44-40 0:3971 0.4150 0.3677 0.3878 0.3405 0.3624 0.3152 0.3875 0.3555 0.3262 0.2992 0.2745 0.3505 0.3186 0.2897 0.2633 0.2394 0.3173 0.2875 0.2607 0.2858 0.2567 0.2307 0.2575 0.2292 0.2042 0.2320 0.2046 0.1807 0.2090 0.1827 0.1999 0.2366 0.2076 0.1821 0.1597 0.1401 0.1954 0.1619 0.1685 0.1372 0.1452 0.1163 0.1252 0.0985 0.1079 0.0835 0.1346 0.1122 0.0935 0.0779 0.0649 16 17 18 19 0.5339 0.5134 0.4936 0.4746 0.4564 $1 (1 + i) 0.4581 0.4363 0.4155 0.3957 0.3769 0.3936 0.3714 0.3503 0.3305 0.3118 0.3387 0.3166 0.2959 0.2765 0.2584 0.2919 0.2703 0.2502 0.2317 0.2145 0.2519 0.2176 0.2311 0.1978 0.2120 0.1799 0.1945 0.1635 0.1784 0.1486 0.1883 0.1631 0.1415 0.1696 0.1456 0.1252 0.1528 0.1300 0.1108 0.1377 0.1161 0,0981 0.1240 0.1037 0.0868 0.1229 0.1078 0.09.16 0.08.29 0.0728 0.0930 0.0802 0.0691 0,0596 0.0514 0.0208 00600 0.0508 0.0431 0.0365 0.0541 0.0451 0.0376 0.0313 0.0261 PV =

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