Present Value of a Single Amount (n) Periods 1 2 3 4 5 6 7 8...

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Present Value of a Single Amount (n) Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 .55526 16 .53391 17 .51337 18 19 20 48102 45811 43630 49363 41552 47464 .39573 45639 .37689 4% 5% 6% 7% 8% 9% .96154 .95238 .94340 .93458 .92593 .91743 .92456 .90703 .89000 .87344 .85734 .84168 .88900 .86384 .83962 .81630 .79383 .77218 85480 .82270 .79209 .76290 .73503 .70843 .82193 .78353 .74726 .71299 .68058 .64993 .79031 .74622 .70496 .66634 .63017 .59627 .75992 .71068 .66506 .62275 .58349 .54703 .73069 .67684 .62741 .58201 .54027 .50187 .70259 .64461 .59190 .54393 .50025 46043 .67556 .61391 .55839 .50835 .46319 42241 .64958 .58468 .52679 .47509 .42888 38753 .35049 31728 .62460 55684 .49697 .44401 .39711 .35554 31863 28584 .25668 .18691 60057 .53032 46884 .41496 .36770 .32618 .28966 .25751 .22917 .16253 .57748 50507 44230 .38782 34046 29925 .26333 .23199 .20462 .14133 .41727 .36245 .31524 .27454 .23939 .20900 .18270 .12289 .39365 .33873 .29189 25187 .21763 .18829 .16312 .10687 .37136 .31657 .27027 .19785 .16963 .14564 .09293 .35034 .29586 .25025 .17986 .15282 .13004 08081 .33051 .27615 .23171 .19449 .16351 .13768 .11611 .07027 31180 .25842 21455 .17843 .14864 .12403 .10367 .06110 10% 11% 12% .90909 .90090 .89286 .82645 .81162 .79719 .75614 .75132 .73119 .71178 .65752 .68301 .65873 .63552 .57175 .62092 .59345 .56743 49718 .56447 .53464 .50663 43233 .51316 .48166 .45235 .37594 46651 43393 42410 .39092 38554 .35218 15% 86957 40388 .32690 .36061 28426 .32197 .28748 24719 .21494 .23107 21199 Bradley company is looking into investing in the purchase of a new building for $250,000. The building is expected to have a 10-year life with $30,000 salvage value. Annual net cash flows are expected to be $60,000 and Net Income is expected to be $40,000. The company's required rate of return is 12%. Using the information above, compute the following (round all answers to 1 decimal place): 1. Calculate the Cash Payback Period (5 pts) 2. Calculate the Net Present Value (10 pts) 3. Compute the NPV of another similar building with a cost of $300,000, with 10-year life, salvage value of $20,000, which can generate $65,000 in annual cash flows, compute the profitability index of the two buildings. (10 pts) 4. Compute the Profitability Index of both buildings and state which building is a better investment and why? (5 pts) 5. Compute the Annual Rate of Return, assuming the company uses Straight-Line depreciation (10 pts) Present Value of an Annuity (n) Payments 6. The company accepts investments with Cash Payback period of less than the half of the useful life, Positive NPV, and an Annual Rate of Return greater than 25%. Should the investment be accepted? Yes or No, and explain why for each method used (10 pts) 2 4% 5% .96154 .95238 1.88609 1.85941 6% .94340 1.83339 3 5 6 2.77509 2.72325 2.67301 7% 8% 9% 10% 11% 12% 15% .93458 .92593 .91743 .90909 90090 .89286 .86957 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5.24214 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 9.38507 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.83929 7.36578 6.19823 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933 10 78961234 11 14 15 16 17 18 19 20 Present Value of a Single Amount (n) Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 .55526 16 .53391 17 .51337 18 19 20 48102 45811 43630 49363 41552 47464 .39573 45639 .37689 4% 5% 6% 7% 8% 9% .96154 .95238 .94340 .93458 .92593 .91743 .92456 .90703 .89000 .87344 .85734 .84168 .88900 .86384 .83962 .81630 .79383 .77218 85480 .82270 .79209 .76290 .73503 .70843 .82193 .78353 .74726 .71299 .68058 .64993 .79031 .74622 .70496 .66634 .63017 .59627 .75992 .71068 .66506 .62275 .58349 .54703 .73069 .67684 .62741 .58201 .54027 .50187 .70259 .64461 .59190 .54393 .50025 46043 .67556 .61391 .55839 .50835 .46319 42241 .64958 .58468 .52679 .47509 .42888 38753 .35049 31728 .62460 55684 .49697 .44401 .39711 .35554 31863 28584 .25668 .18691 60057 .53032 46884 .41496 .36770 .32618 .28966 .25751 .22917 .16253 .57748 50507 44230 .38782 34046 29925 .26333 .23199 .20462 .14133 .41727 .36245 .31524 .27454 .23939 .20900 .18270 .12289 .39365 .33873 .29189 25187 .21763 .18829 .16312 .10687 .37136 .31657 .27027 .19785 .16963 .14564 .09293 .35034 .29586 .25025 .17986 .15282 .13004 08081 .33051 .27615 .23171 .19449 .16351 .13768 .11611 .07027 31180 .25842 21455 .17843 .14864 .12403 .10367 .06110 10% 11% 12% .90909 .90090 .89286 .82645 .81162 .79719 .75614 .75132 .73119 .71178 .65752 .68301 .65873 .63552 .57175 .62092 .59345 .56743 49718 .56447 .53464 .50663 43233 .51316 .48166 .45235 .37594 46651 43393 42410 .39092 38554 .35218 15% 86957 40388 .32690 .36061 28426 .32197 .28748 24719 .21494 .23107 21199 Bradley company is looking into investing in the purchase of a new building for $250,000. The building is expected to have a 10-year life with $30,000 salvage value. Annual net cash flows are expected to be $60,000 and Net Income is expected to be $40,000. The company's required rate of return is 12%. Using the information above, compute the following (round all answers to 1 decimal place): 1. Calculate the Cash Payback Period (5 pts) 2. Calculate the Net Present Value (10 pts) 3. Compute the NPV of another similar building with a cost of $300,000, with 10-year life, salvage value of $20,000, which can generate $65,000 in annual cash flows, compute the profitability index of the two buildings. (10 pts) 4. Compute the Profitability Index of both buildings and state which building is a better investment and why? (5 pts) 5. Compute the Annual Rate of Return, assuming the company uses Straight-Line depreciation (10 pts) Present Value of an Annuity (n) Payments 6. The company accepts investments with Cash Payback period of less than the half of the useful life, Positive NPV, and an Annual Rate of Return greater than 25%. Should the investment be accepted? Yes or No, and explain why for each method used (10 pts) 2 4% 5% .96154 .95238 1.88609 1.85941 6% .94340 1.83339 3 5 6 2.77509 2.72325 2.67301 7% 8% 9% 10% 11% 12% 15% .93458 .92593 .91743 .90909 90090 .89286 .86957 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5.24214 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 9.38507 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.83929 7.36578 6.19823 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933 10 78961234 11 14 15 16 17 18 19 20