Requirements 1. Calculate (a) net present value, (b) payback period, and (c) internal rate of return. 2. Calculate the project's accrual accounting rate of return based on net initial investment. Relevant Cash Flows at End of Each Year 0 1 Initial machine investment $ (62,000) Annual cash flows from operations (excluding the depreciation affect) Cash flow from terminal disposal of machine Present Value of $1.00 S In this table S = $1.00. (1+1) 2 3 - 4 $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 2,000 Periods 1 2 0.960 0.961 1% 2% 4% 0.990 0.980 0.962 0.925 3 4 0.971 0.961 5 6% 0.943 0.800 0.857 0.942 0.889 0.840 0.794 0.924 0.855 0.702 0.735 0.961 0.006 0.822 0.747 0.681 0.942 8% 10% 12% 18% 20% 22% 0.926 0.909 0.893 0.862 0.847 0.833 0.820 0.826 0.797 0.769 0.743 0.718 0.694 0.672 0.751 0.712 0.675 0.641 0.609 0.579 0.551 0.524 0.683 0.636 0.502 0.562 0.516 0.482 0.451 0.423 0.621 0.567 0.519 0.476 0.437 0.402 0.370 0.341 0.888 0.790 0.706 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.303 14% 0.877 16% 0.275 24% 26% 28% 0.806 0.794 0.781 0.650 0.630 0.610 0.500 0.477 0.307 0.373 0.315 0.291 0.200 0.250 0.250 0.227 0.207 0.189 30% 32% 0.769 0.758 0.502 0.574 0.455 0.350 0.435 0.329 Table 1 Compound Amount of $1.00 (The Future Value of $1.00) S-P(1+r). In this table P= $1.00 Periods 1% 2% 4% 6% 8% 10% 12% 14% 16% 223- 1 1.010 1.020 1.040 1.060 1.060 1.100 1.120 1.140 1.020 1.040 1.082 1.124 1.168 1.210 1.254 1.030 1.061 1.125 1.191 1.260 1.331 1.405 4 1.041 1.082 1.170 1.262 1.360 1.464 1.574 18% 1.160 1.180 1.300 1.346 1.302 1.482 1.561 1.643 20% 22% 24% 26% 28% 30% 1.200 1.220 1.240 1.260 1.280 1. 1.440 1.488 1.538 1.588 1.638 1. 1.728 1.816 1.907 2.000 2.007 2. 1.680 1.811 1.939 2.074 2215 2.364 2.520 2.684 2. Present Value of Annuity $1.00 in Arrears* 1 Periods (1+ 1% 2% 4% 6% 1 0.990 0.960 0.962 2 1.970 1.942 1.886 0.943 1.833 3 2.041 2.084 2.775 2.673 4 3.902 3.808 3.630 3.466 199 5 4.853 4.713 4.452 6 5.796 5.601 6.728 6.472 5.242 6.002 4.212 4.917 5.582 4.623 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.885 2.750 2.643 2.534 5.206 4.868 4.564 4.200 4.000 3.812 3.606 3.416 3.242 3.083 2.937 2.802 2.677 Table 3 Compound Amount of Annuity of $1.00 in Arrears' (Future Value of Annuity) (1+r)-1 8% 10% 12% 14% 16% 18% 20% 22% 24% 20% 28% 30% 32% 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.820 0.806 0.794 0.781 0.769 0.758 1.783 1.736 1.600 1.647 1.605 1.566 1.528 1,400 1.457 1.424 1.300 1.361 1.301 2.577 2.487 2.402 2.322 2.248 2.174 2.106 2.042 1.981 1.903 1.888 1.816 1.766 3.312 3.170 3.037 2.914 2.796 2.000 2.580 2.494 2.404 2.320 2.241 2.166 2.006 3.903 3.791 3.605 3.433 3.274 3.127 2.991 2.864 2.745 2.635 2.532 2.436 2.345 3.167 Periods 1% 1 2% 4% 1.000 1.000 1.000 2 2.010 2.020 2040 6% 1.000 2.060 3 3.030 3.060 3.122 3.184 4 8% 10% 12% 14% 1.000 1.000 1.000 1.000 2.080 2.100 2.120 2.140 3.246 3.310 3.374 3.440 4.060 4.122 4246 4.375 4.506 4.641 4.779 16% 18% 20% 22% 24% 26% 29% 30% 32 1.000 1.000 2.160 2.180 1.000 1.000 1.000 1.000 1.000 1.000 1 2.200 2.220 2.240 2.260 2.280 2.300 3.506 3.572 3.640 3.706 3.778 3.848 3.918 3.900 4.921 5 6 5.101 5.204 5.416 6.152 6.308 6.633 6.975 7.336 7.716 8.116 5.637 5.867 6.106 6.353 6.610 5.066 6.877 8.636 8.977 5.215 7.154 7.442 9.442 5.368 5.524 5.684 5.848 6.016 6.187 246 7.740 8.048 8.368 8.700 9.043 9 9.930 10.442 10.000 11.544 12.136 12.756 13