The following data are accumulated by Reynolds Company in evaluating the purchase of $127,100 of equipment, having a four-year useful life:

	Net Income	Net Cash Flow
Year 1	$41,000	$69,000
Year 2	25,000	53,000
Year 3	12,000	40,000
Year 4	(1,000)	27,000

Present Value of $1 at Compound Interest

Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	0.890	0.826	0.797	0.756	0.694
3	0.840	0.751	0.712	0.658	0.579
4	0.792	0.683	0.636	0.572	0.482
5	0.747	0.621	0.567	0.497	0.402
6	0.705	0.564	0.507	0.432	0.335
7	0.665	0.513	0.452	0.376	0.279
8	0.627	0.467	0.404	0.327	0.233
9	0.592	0.424	0.361	0.284	0.194
10	0.558	0.386	0.322	0.247	0.162

Assuming that the desired rate of return is 10%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar.

Present value of net cash flow	$
Less amount to be invested	$
Net present value	$

 

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The following data are for the pension plan for the employees of Lockett Company. 1/1/14 12/31/14 12/31/15 Accumulated benefit obligation $2,500,000 2,700,000 $2,600,000 $3,400,000 3,700,000 Projected benefit obligation Plan assets (at fair value) 2,800,000 2,300,000 3,000,000 3,300,000 -0- 480,000 500,000 AOCL - net loss Settlement rate (for year) 10% 9% 7% Expected rate of return (for year) 8% Lockett's contribution was $420,000 in 2015 and benefits paid were $375,000. Lockett estimates that the average remaining service life is 15 years. Assume that the actual return on plan assets in 2015 was $265,000. The corridor for 2015 was $300,000. The amount of AOCI-net loss amortized in 2015 was $14,000. $32,000. $33,333. $12,000. The following data are for the pension plan for the employees of Lockett Company. 1/1/14 12/31/14 12/31/15 Accumulated benefit obligation $2,500,000 2,700,000 $2,600,000 $3,400,000 3,700,000 Projected benefit obligation Plan assets (at fair value) 2,800,000 2,300,000 3,000,000 3,300,000 -0- 480,000 500,000 AOCL - net loss Settlement rate (for year) 10% 9% 7% Expected rate of return (for year) 8% Lockett's contribution was $420,000 in 2015 and benefits paid were $375,000. Lockett estimates that the average remaining service life is 15 years. Assume that the actual return on plan assets in 2015 was $265,000. The corridor for 2015 was $300,000. The amount of AOCI-net loss amortized in 2015 was $14,000. $32,000. $33,333. $12,000.

Answer rating: 100% (QA)

Part 1 We have to look at the column under 10 The respective discount factors are 0909 0826 0... View the full answer