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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 $$920,000.$ 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 $$1$ table.$)($Click the icon to view Present Value of Ordinary Annuity of $$1$ table.$).$

Read the requirements.

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 minus sign for a negative net present value.$)$

$\backslash$table$[[$Years$,,\backslash$table$[[$Net Cash$],[$Inflow$]],\backslash$table$[[\backslash$table$[[$PV Factor $($i$],[=16\%)]]]],$Present Value$],[$Year $1,$Present value of each year's inflow: $)=(1,,,],[$Year $2,$Present value of each year's inflow: $)=(2,,,],[$Year $3,$Present value of each year's inflow: $)=(3,,,],[$Year $4,$Present value of each year's inflow: $)=(4,,,],[$Year $5,$Present value of each year's inflow: $)=(5,,,],[$Year $6,$Present value of each year's inflow: $)=(6,,,],[,$Total PV of cash inflows,,,$],[$Year $0,$Initial investment,,,$],[,$Net present value of the project,,,$]]$

Data table

$\backslash$table$[[$Year $1,261,000],[$Year $2,252,000],[$Year $3,223,000],[-$ Year $4,215,000],[$Year $5,200,000],[$Year $6,177,000]]$

m to $9$:$50am$

Question $6,$ EM$9-24($similar to$)$

HW Score: $65\mathrm{.}87\%,23\mathrm{.}71$

led

Part $1$ of $4$

Points: $0$ of $6$

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Requirements

Compute this project's NPV using Venu's $16\%$ hurdle rate. Should Venu invest in the equipment?

Venu could refurbish the equipment at the end of six years for $$106,000.$ The refurbished equipment could be used one more year, providing $$74,000$ of net cash inflows in year $7.$ Additionally, the refurbished equipment would have a $$53,000$ 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.$)$

Data table

X$.$ Use parenthese

$q,$

Data table

$q,$

Year $1$

Year $2$

Year $3$

Year $4$

Year $5$

Year $6$

Print

ore help $.$

Venu Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six$-$year life and will cost $$920,000.$ Projected net cash inflows are as follows:

$$

$q,$

$($Click the icon to view the projected net cash inflows.$)$

$($Click the icon to view Present Value of $$1$ table.$)($Click the icon to view Present Value of Ordinary Annuity of $$1$ table.$)$

Read the requirements.

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 minus sign for a negative net present value.$)$

Answer & Explanation Solved by verified expert

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