John needs a new production machine for operations.

The machine cost is $250,000

Estimated life is 7years

Additional revenue is expected to be $30,000, net of tax, per year (based upon 1,000 additional widgets produced per run)

Additional efficiency labor savings per time study is $17,600 per year

Additional tax savings from depreciation based upon a tax rate of 35% calculated on a straight line basis

Payback ?

NPV @8%(hurdle rate)

IRR-

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2 Period 3 4 5 6 18 G H K M O P Q R S Present value interest factor of an (ordinary) annuity of $1 per period at i% for n periods, PVIFA(i,n). 1% 4% 5% 6% 7% 8% 1 0.990 2% 3% 0.980 0.971 0.962 1.942 1.913 1.886 8 7.652 9 8.566 10 9.471 11 10.368 12 11.255 0.952 0.943 0.935 2 1.970 1.859 1.833 1.808 3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 5 4853 4.713 4.580 4.452 4.329 4212 4.100 65.795 5.601 5.417 5.242 5.076 4.917 4767 7 6.728 6.472 6230 6.002 5.786 5.582 5.389 7.325 7,020 6.733 6.463 6.210 5.971 5.747 8.162 7.786 7.435 7.108 6.802 6.515 6.247 8.983 8.530 8.111 7.722 7.360 7.024 6.710 9.787 9.253 8.760 8.306 7.887 7.499 7.139 10.575 9.954 9.385 8.863 8.384 7.943 7.536 11.348 10.635 9.986 9.394 8.853 8.358 7.904 12.106 11.296 10.563 9.899 9.295 8.745 8.244 12.849 11.938 11.118 10.380 9.712 9.108 8.559 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 19 17 226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 25 35 29.409 24.999 21.487 18.665 16.374 14.498 12.948 11.655 26 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 31.424 25.730 21.482 18.256 15 762 13.801 12233 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0.926 0.917 0.909 0.901 0893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0833 1.783 1.759 1.736 1.713 1.690 1.668 1.547 1.626 1.605 1.585 1.566 1547 1528 2.577 2531 2487 2444 2.402 2361 2322 2283 2246 2.210 2174 2.140 2.106 3.312 3240 3.170 3.102 3037 2.974 2914 2.855 2798 2743 2.690 2639 2.589 3.993 3.890 3.791 3696 3.605 3517 3.433 3.352 3274 3.199 3.127 3058 2.991 4.623 4.486 4.355 4231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 5.206 5.033 4.868 4712 4564 4.423 4288 4.160 4.039 3.922 3.812 3706 3.605 5.535 5.335 5.146 4968 4799 4.639 4487 4344 4207 4.078 3.954 3.837 5.995 5.759 5.537 5328 5.132 4.946 4.772 4.607 4451 4303 4.163 4.031 6.418 6.145 5889 5.650 5.426 5216 5019 4.833 4.659 4494 4339 4192 6.805 6.495 6.207 5.938 5.687 5.453 5234 5.029 4836 4655 4.485 4.327 7.161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4611 4439 7.487 7.103 6.750 6424 6.122 5842 5.583 5.342 5.118 4910 4715 4533 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 8.061 7.605 7.191 6811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.575 8.313 7.824 7.379 6974 6.604 6.265 5.954 5.668 5.405 5.162 4938 4730 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 8.756 8201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 8.950 8.365 7.839 7.366 6938 6.550 6.198 5.877 5.584 5.316 5.070 4843 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5 929 5.628 5.353 5.101 4.870 9.823 9077 8.422 7.843 7330 6.873 6.464 6.097 5.766 5467 5.195 4948 10 274 9.427 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 5235 4979 10.567 9.644 8.855 8.176 7.586 7.070 6617 6215 5.858 5539 5.251 4992 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6233 5.871 5.548 5.258 4.997 10 962 9.915 9.042 8.304 7.675 7.133 6.661 6245 5.880 5.554 5.262 4.999 13 12.134 14 13.004 15 13.865 5939 195 9 10 11 12 13 14 15 16 17 18 19 20 1222227 23 B 24 U 2 Period 3 4 5 6 18 G H K M O P Q R S Present value interest factor of an (ordinary) annuity of $1 per period at i% for n periods, PVIFA(i,n). 1% 4% 5% 6% 7% 8% 1 0.990 2% 3% 0.980 0.971 0.962 1.942 1.913 1.886 8 7.652 9 8.566 10 9.471 11 10.368 12 11.255 0.952 0.943 0.935 2 1.970 1.859 1.833 1.808 3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 5 4853 4.713 4.580 4.452 4.329 4212 4.100 65.795 5.601 5.417 5.242 5.076 4.917 4767 7 6.728 6.472 6230 6.002 5.786 5.582 5.389 7.325 7,020 6.733 6.463 6.210 5.971 5.747 8.162 7.786 7.435 7.108 6.802 6.515 6.247 8.983 8.530 8.111 7.722 7.360 7.024 6.710 9.787 9.253 8.760 8.306 7.887 7.499 7.139 10.575 9.954 9.385 8.863 8.384 7.943 7.536 11.348 10.635 9.986 9.394 8.853 8.358 7.904 12.106 11.296 10.563 9.899 9.295 8.745 8.244 12.849 11.938 11.118 10.380 9.712 9.108 8.559 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 19 17 226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 25 35 29.409 24.999 21.487 18.665 16.374 14.498 12.948 11.655 26 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 31.424 25.730 21.482 18.256 15 762 13.801 12233 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0.926 0.917 0.909 0.901 0893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0833 1.783 1.759 1.736 1.713 1.690 1.668 1.547 1.626 1.605 1.585 1.566 1547 1528 2.577 2531 2487 2444 2.402 2361 2322 2283 2246 2.210 2174 2.140 2.106 3.312 3240 3.170 3.102 3037 2.974 2914 2.855 2798 2743 2.690 2639 2.589 3.993 3.890 3.791 3696 3.605 3517 3.433 3.352 3274 3.199 3.127 3058 2.991 4.623 4.486 4.355 4231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 5.206 5.033 4.868 4712 4564 4.423 4288 4.160 4.039 3.922 3.812 3706 3.605 5.535 5.335 5.146 4968 4799 4.639 4487 4344 4207 4.078 3.954 3.837 5.995 5.759 5.537 5328 5.132 4.946 4.772 4.607 4451 4303 4.163 4.031 6.418 6.145 5889 5.650 5.426 5216 5019 4.833 4.659 4494 4339 4192 6.805 6.495 6.207 5.938 5.687 5.453 5234 5.029 4836 4655 4.485 4.327 7.161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4611 4439 7.487 7.103 6.750 6424 6.122 5842 5.583 5.342 5.118 4910 4715 4533 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 8.061 7.605 7.191 6811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.575 8.313 7.824 7.379 6974 6.604 6.265 5.954 5.668 5.405 5.162 4938 4730 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 8.756 8201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 8.950 8.365 7.839 7.366 6938 6.550 6.198 5.877 5.584 5.316 5.070 4843 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5 929 5.628 5.353 5.101 4.870 9.823 9077 8.422 7.843 7330 6.873 6.464 6.097 5.766 5467 5.195 4948 10 274 9.427 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 5235 4979 10.567 9.644 8.855 8.176 7.586 7.070 6617 6215 5.858 5539 5.251 4992 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6233 5.871 5.548 5.258 4.997 10 962 9.915 9.042 8.304 7.675 7.133 6.661 6245 5.880 5.554 5.262 4.999 13 12.134 14 13.004 15 13.865 5939 195 9 10 11 12 13 14 15 16 17 18 19 20 1222227 23 B 24 U