Ch 11 Ex 11-9 A Submit Saved Help Save & Exit Check my work Exercise 11-9 Computing net present value LO P3 B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $379,200 with a 6-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 151,680 units of the equipment's product each year. The expected annual income related to this equipment follows. 10 points ok $ 237,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and adminiatrative expenses Total costs and expenses Hint 83,000 63,200 23,700 169,900 Ask Print Pretax income 67,100 References 26,840 40,260 Income taxes (408) Net income If at least an 9% return on this investment must be earned, compute the net present value of this investment. (PV of $1. EV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Chart Values are Based on: n= Ch 11 Ex 11-9 A Save & Exit Submit Saved Help Check my work 1 26,840 $ 40,260 Income taxes (40%) Net income If at least an 9% return on this investment must be earned, compute the net present value of this investment. PV of $1; FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) 10 points Chart Values are Based on: eBook Hint i = Select Chart PV Factor- Present Value Amount Ask Print References Net present value TABLE B.1* p = 1/(1+iy" Present Value of 1 Rate 15% 12% 10% Perlods 1% 2% 7% 8% 3% 4% 5% 6% 0.9174 0.8417 0.9091 0.8264 0.8929 0.7972 0.8696 0.9259 0.8573 0.9901 0.9804 0.9709 0.9524 0.9346 0.8734 0.9615 0.9434 0.7561 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.7118 0.6355 0.9706 0.9610 0.8890 0.8548 0.8219 0.7903 0.7938 0.7350 0.7513 0.6575 0.9423 0.9151 0.8163 0.7722 0.8638 0.8396 0.7084 0.6499 0.5963 0.6830 0.5718 0.9238 0.8227 0.7629 0.8885 0.7921 0.9515 0.9420 0.6806 0.6302 0.7473 0.7050 0.6209 0.5674 0.4972 0.9057 0.8626 0.7835 0.7130 0.5066 0.7462 0.5645 0.4323 0.8880 0.8375 0.6663 0.4523 0.9327 0.8706 0.8131 0.7599 0.7107 0.6768 0.6651 0.6274 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.5470 0.5132 0.3759 0.6227 0.5019 0.4604 0.3269 0.2843 0.4665 0.4039 8. 0.9235 0.8535 0.7894 0.7307 0.5820 0.5919 0.5584 0.4241 0.3855 0.3505 0.3186 0.3606 0.3220 0.2875 0.2567 0.7664 0.7026 0.9143 0.8368 0.6446 0.5439 0.8203 0.8043 0.7885 0.7730 0.7441 0.6139 0.5847 0.5568 0.5303 0.5083 0.4751 0.2472 10 0.9053 0.6756 0.4224 0.2149 0.1869 0.1625 0.6496 0.6246 0.6006 0.3875 11 0.8963 0.7224 0.5268 0.4970 0.4688 0.4423 0.4173 0.3936 12 0.8874 0.7014 0.4440 0.3555 0.6810 0.4150 13 0.8787 0.3262 0.2897 0.2292 0.3878 0.3624 0.7579 0.7430 0.2992 0.8700 0.6611 0.5775 0.5553 0.5339 0.5051 0.3405 0.2633 0.2394 0.2176 0.2046 0.1827 0.1413 0.1229 0.1069 14 0.8613 0.8528 0.4810 0.4581 0.3152 0.6419 15 0.2745 0.6232 16 0.7284 0.3387 0.2919 0.2519 0.1631 0.5134 0.4936 0.8444 0.8360 0.6050 0.3714 0.3503 0.3305 0.3118 0.1978 0.1799 0.1635 0.1456 0.1300 0.4363 0.3166 0.2703 17 0.7142 0.2311 0.0929 0.4155 0.3957 0.7002 0.6864 0.2502 0.2317 18 0.5874 0.2959 0.2120 0.0808 0.0703 0.5703 0.4746 0.2765 19 0.8277 0.1945 0.1161 0.4564 0.3751 0.3083 0.2534 0.2584 0.1784 0.1160 0.0754 0.0490 0.0318 0.5537 0.3769 20 0.8195 0.6730 0.2145 0.1486 0.1037 0.0611 0.2330 0.1741 0.7798 0.7419 0.2953 0.2314 0.0923 0.0573 0.0356 0.6095 0.4776 0.1842 0.1460 25 0.0588 0.0334 0.0189 0.0304 0.4120 0.1314 30 0.5521 0.0994 0.0151 0.7059 0.6717 0.3554 0.3066 0.5000 0.1813 0.1301 0.0937 0.0676 35 0.0075 0.2083 0.1420 0.0972 0.0668 40 0.4529 0.0460 0.0107 0.0221 0.0037 *Used to compute the present valuc of a known future amount. For ex ample: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n= 12 and i=5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5,000 x 0.5568). TABLE B.2 f= (1+ iy" Future Value of 1 Rate 15% Perlods 10% 12% 1% 8% 2% 3% 4% 5% 6% 7% %6 1.0000 1.0800 1.1664 1.0000 1.0000 1.0900 1.1881 1.2950 1.4116 1.0000 1.1000 1.0000 1.0000 1.0200 1.0000 1.0600 1.1236 1.1910 1.2625 1.3382 1.4185 1.0000 1.0000 1.0000 1.0000 1.0000 1.1500 1.0100 1.0201 1.0303 1.0300 1.0609 1.1200 1.0700 1.0400 1.0500 1.0404 1.0612 1.0824 1.1025 1.1576 1.2100 1.2544 1.3225 1.0816 1.1449 1.5209 1.2250 1.3108 1.4026 1.3310 1.4049 3 1.0927 1.2597 1.1249 1.4641 1.6105 1.3605 1.4693 1.5735 1.7490 1.0406 1.1699 1.2167 1.2155 1.1255 1.5386 1.6771 2.0114 2.3131 1.7623 1.0510 1.0615 1.1041 1.1593 1.2763 1.1262 1.5869 1.7716 1.9738 1.1941 1.3401 1.5007 1.2653 1.3159 1.3686 1.4071 1.4775 1.5513 1.5036 1.5938 1.6895 1.9487 2.1436 1.6058 1.7182 1.7138 1.8280 2.2107 2.6600 1.0721 1.1487 1.2299 2.4760 2.7731 3.0590 1.0829 1.1717 1.2668 1.3048 1.8509 1.9926 1.8385 1.9990 2.1719 2.3579 3.5179 1.0937 1.1951 1.4233 1.4802 1.5395 1.6010 1.6289 2.5937 3.1058 4.0456 1.2190 1.3439 1.7908 1.9672 2.1589 2.3674 1.1046 1.8983 2.0122 2.1329 4.6524 5.3503 6.1528 3.4785 1.1157 1.1268 1.1381 1.3842 1.4258 1.7103 2.1049 2.3316 2.5804 2.8531 3.1384 1.2434 1.7959 1.8856 1.2682 1.2936 1.3195 1.3459 1.3728 1.4002 2.5182 2.7196 2.8127 2.2522 3.8960 2.4098 3.4523 4.3635 1.4685 1.6651 3.0658 3.3417 3.6425 3.9703 4.3276 4.8871 1.1495 1.1610 1.5126 1.7317 1.9799 2.2609 2.5785 2.9372 3.7975 7.0757 2.0789 2.1829 4.1772 4.5950 5.0545 5.4736 6.1304 8.1371 9.3576 10.7613 2.3966 2.7590 3.1722 3.4259 1.8009 1.8730 1.9479 2.0258 2.1068 2.1911 1.5580 1.1726 1.1843 1.1961 1.2081 1.2202 1.2824 2.5404 2.9522 1.6047 2.6928 2.8543 3.0256 3.2071 4.2919 2.2920 3.1588 1.6528 3.7000 6.8660 1.4282 1.4568 2.4066 3.3799 3.9960 4.7171 5.5599 1.7024 7.6900 12.3755 14.2318 2.5270 2.6533 3.6165 3.8697 4.3157 1.7535 5.1417 6.1159 8.6128 9.6463 5.6044 1.8061 4.6610 6.7275 16.3665 1.4859 2.6658 6.8485 10.0627 14.7853 3.3864 5.4274 10.8347 17.0001 2.0938 8.6231 32.9190 1.6406 3.2434 4.3219 5.7435 7.6123 2.4273 13.2677 17.4494 29.9599 66.2118 1.3478 1.8114 3.9461 52.7996 93.0510 1.9999 2.8139 5.5160 7.6861 10.6766 20.4140 28.1024 133.1755 1.4166 10.2857 3.2620 7.0400 14.9745 45.2593 1.4889 2.2080 4.8010 21.7245 31.4094 267.8635 "Used to compute the future value of a known present amount. For ex ample: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n= 20 and i= 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 (S3,000 x 1.4859). TABLE B.3 li (1+ i)" Present Value of an Annuity of 1 Rate Periods 10% 12% 15% 1% 2% 7% 8% 3% 4% 5% 6% %6 0.9259 1.7833 0.9174 1.7591 0.8696 1.6257 0.9346 0.9091 1.7355 0.8929 1.6901 0.9901 0.9804 0.9709 0.9615 1.8861 2.7751 0.9524 1.8594 2.7232 0.9434 1.9135 2.8286 1.9704 1.9416 1.8080 1.8334 2.5313 3.2397 3.8897 4.4859 2.4018 3 2.8839 2.6730 2.4869 2.2832 2.9410 2.6243 2.5771 4 3.7171 4.5797 3.3872 3.3121 3.1699 3.0373 2.8550 3.9020 3.8077 3.6299 3.5460 4.3295 3.4651 4.2124 3.3522 3.7908 3.6048 4.1114 4.8534 4.7135 5.6014 6.4720 4.1002 3.9927 4.4518 4.3553 4.6229 5.2064 5.7466 6.2469 6.7101 3.7845 6. 5.7955 5.4172 5.2421 5.0757 4.9173 4.7665 5.3893 4.5638 4.9676 5.3282 5.0330 4.1604 5.7864 5.5824 4.8684 6.7282 6.2303 6.0021 6.7327 7.4353 6.2098 5.9713 7.6517 7.3255 7.0197 6.4632 5.5348 5.3349 4.4873 8.1622 8.9826 9.7868 10.5753 11.3484 12.1062 8.5660 5.9952 5.7590 4.7716 7.7861 7.1078 6.8017 6.5152 6.4177 6.8052 7.3601 6.1446 5.6502 10 8.5302 8.1109 7.7217 7.0236 5.0188 9.4713 7.4987 7.9427 8.3577 10.3676 11.2551 8.7605 9.3851 7.8869 8.3838 6.4951 5.2337 9.2526 8.3064 7.1390 5.9377 11 8.8633 7.5361 7.9038 12 9.9540 7.1607 6.8137 6.1944 5.4206 9.9856 8.8527 9.2950 6.4235 5.5831 5.7245 10.6350 9.3936 7.4869 7.1034 13 12.1337 10.5631 9.8986 7.7862 13.0037 11.2961 8.7455 8.2442 7.3667 6.6282 14 12.8493 13.5777 10.3797 9.7122 11.9379 11.1184 9.1079 13.8651 8.5595 8.0607 8.3126 8.5436 7.6061 6.8109 5.8474 15 10.1059 10.4773 12.5611 11.6523 10.8378 9.4466 8.8514 6.9740 7.1196 7.2497 5.9542 6.0472 16 14.7179 7.8237 12.1657 11.2741 8.0216 15.5623 14.2919 13.1661 9.7632 10.0591 9.1216 17 13.7535 14.3238 14.9920 12.6593 11.6896 10.8276 8.7556 16.3983 9.3719 8.2014 6.1280 18 9.6036 9.8181 13.1339 12.0853 11.1581 10.3356 6.1982 17.2260 15.6785 8.9501 8.3649 7.3658 19 9.1285 9.8226 12.4622 14.0939 7.4694 7.8431 14.8775 13.5903 11.4699 10.5940 8.5136 9.0770 9.4269 6.2593 18.0456 16.3514 20 19.5235 22.3965 24.9986 27.3555 15.6221 12.7834 11.6536 10.6748 17.4131 6.4641 25 22.0232 11.2578 11.6546 25.8077 29.4086 32.8347 15.3725 19.6004 17.2920 13.7648 12.4090 10.2737 8.0552 6.5660 30 16.3742 21.4872 23.1148 18.6646 14.4982 12.9477 8.1755 8.2438 6.6166 10.5668 9.6442 35 19.7928 17.1591 15.0463 13.3317 9.7791 6.6418 11.9246 10.7574 40 *Used to calculate the present value of a series of equal payments made at the end of cach period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest ratc of 9%? For (n= 10, i = 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177). TABLE B.4 f= [(1 +i"- 1]/i Future Value of an Annuity of 1 Rate Periods 1% 2% 10% 12% 15% 3% 4% 6% 7% 8% 9% 5% 1.0000 1.0000 2.0500 1.0000 2.0600 1.0000 2.1000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0700 2.1200 3.3744 2.0100 2.0300 3.0909 4.1836 2.0400 3.1216 4.2465 2.0900 2.0200 2.0800 2.1500 3 3.0301 3.1836 3.2149 4.4399 3.2464 3.3100 3.4725 3.0604 3.2781 3.1525 4.6410 6.1051 4.7793 6.3528 4.0604 5.1010 4.1216 4.5731 4.3101 4.3746 4.5061 4.9934 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.7424 8.1152 10.0890 6.1520 7.2135 6.3081 7.5233 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.7156 8.7537 11.0668 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 8.2857 9.3685 8.8923 9.7546 10.1591 9.2142 8.5830 9.5491 9.8975 11.4359 10.2598 10.6366 11.0285 12.2997 14.7757 17.5487 20.6546 24.1331 13.7268 16.7858 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 11.4639 12.8078 10.9497 12.0061 13.4864 15.0258 12.5779 14.2068 15.9171 13.1808 10 10.4622 13.8164 15.1929 17.5603 14.4866 15.9374 20.3037 11 11.5668 12.1687 14.9716 15.7836 16.6455 18.5312 24.3493 14.1920 16.8699 18.8821 12 12.6825 13.4121 17.8885 18.9771 20.1407 21.3843 24.5227 29.0017 13 13.8093 14.6803 15.6178 16.6268 17.7130 20.1406 22.9534 21.4953 28.0291 34.3519 22.5505 25.1290 17.0863 18.2919 14 14.9474 15.9739 19.5986 21.0151 24.2149 27.1521 26.0192 32.3926 27.9750 40.5047 21.5786 23.6575 29.3609 33.0034 15 16.0969 17.2934 18.5989 20.0236 23.2760 31.7725 37.2797 47.5804 18.6393 16 17.2579 20.1569 21.8245 25.6725 27.8881 30.8402 30.3243 35.9497 42.7533 55.7175 18.4304 19.6147 21.4123 22.8406 23.6975 28.2129 33.7502 37.4502 41.4463 17 20.0121 21.7616 25.8404 36.9 41.3013 46.0185 65.0751 40.5447 48.8837 23.4144 25.1169 25.6454 27.6712 28.1324 30.9057 18 33.9990 45.5992 51.1591 55.7497 75.8364 30.5390 19 20.8109 33.7600 37.3790 63.4397 88.2118 36.7856 54.8645 79.0582 26.8704 22.0190 24.2974 29.7781 33.0660 45.7620 73.1059 20 40.9955 57.2750 51.1601 72.0524 102.4436 32.0303 41.6459 56.0849 47.7271 25 28.2432 34.7849 36.4593 63.2490 94.4608 138.2369 133.3339 241.3327 431.6635 98.3471 84.7009 212.7930 40.5681 47.5754 66.4388 30 136.3075 164.4940 271.0244 113.2832 434.7451 41.6603 73.6522 35 49.9945 60.4621 90.3203 111.4348 172.3168 215.7108 881.1702 60.4020 75.4013 95.0255 120.7998 40 48.8864 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 SUsed to calculate the future value of a series of equal pay ments made at the end of cach period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%? For (n= 6, i = 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 x 7.3359)