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TABLE 2 Present Value of an Annuity of $1 n 123456 8% 9% 0.925926 0.917431 4 7 8 9 10 11 12 13 14

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TABLE 2 Present Value of an Annuity of $1 n 123456 8% 9% 0.925926 0.917431 4 7 8 9 10 11 12 13 14 15 16 17 11.652296 10.837770 10.105895 9.446649 12.165669 11.274066 10.477260 9.763223 18 19 12.659297 11.689587 10.827603 10.059087 9.371887 13.133939 12.085321 11.158116 10.335595 9.603599 20 4% 5% 6% 7% 14% 16% 0.961538 0.952381 0.943396 0.934579 0.877193 0.862069 1.886095 1.859410 1.833393 1.808018 1.646661 1.605232 1.527778 2.775091 2.723248 2.673012 2.624316 2.577097 2.531295 2.486852 2.401831 2.321632 2.24589 2.106481 3.629895 3.545951 3.465106 3.387211 3.312127 3.239720 3.169865 3.037349 2.913712 2.798181 2.588735 4.451822 4.329477 4.212364 4.100197 3.992710 3.889651 3.790787 3.604776 3.433081 3.274294 2.990612 5.242137 5.075692 4.917324 4.766540 4.622880 4.485919 4.355261 4.111407 3.888668 3.684736 3.325510 6.002055 5.786373 5.582381 5.389289 5.206370 5.032953 4.868419 4.563757 4.288305 4.038565 3.604592 6.732745 6.463213 6.209794 5.971299 5.746639 5.534819 5.334926 4.967640 4.638864 4.343591 3.837160 7.435332 7.107822 6.801692 6.515232 6.246888 5.995247 5.759024 5.328250 4.946372 4.606544 4.030967 8.110896 7.721735 7.360087 7.023582 6.710081 6.417658 6.144567 5.650223 5.216116 4.833227 4.192472 8.760477 8.306414 7.886875 7.498674 7.138964 6.805191 6.495061 5.937699 5.452733 5.028644 4.327060 9.385074 8.863252 8.383844 7.942686 7.536078 7.160725 6.813692 6.194374 5.660292 5.197107 4.439217 9.985648 9.393573 8.852683 8.357651 7.903776 7.486904 7.103356 6.423548 5.842362 5.342334 4.532681 10.563123 9.898641 9.294984 8.745468 8.244237 7.786150 7.366687 6.628168 6.002072 5.467529 4.610567 11.118387 10.379658 9.712249 9.107914 8.559479 8.060688 7.606080 6.810864 6.142168 5.575456 4.675473 8.851369 8.312558 7.823709 6.973986 6.265060 5.668497 4.729561 9.121638 8.543631 8.021553 7.119630 6.372859 5.748704 4.774634 8.755625 8.201412 7.249670 6.467420 5.817848 4.812195 8.905115 8.364920 7.365777 6.550369 5.877455 4.843496 13.590326 12.462210 11.469921 10.594014 9.818147 9.128546 8.513564 7.469444 6.623131 5.928841 4.869580 10% 12% 0.909091 0.892857 1.783265 1.759111 1.735537 1.690051 20% 0.833333 TABLE 1 Present Value of $1 11234 n 9% 0.917431 0.84168 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 4% 5% 6% 7% 8% 0.961538 0.952381 0.943396 0.934579 0.925926 0.924556 0.907029 0.889996 0.873439 0.857339 0.888996 0.863838 0.839619 0.816298 0.793832 0.772183 0.751315 0.711780 0.674972 0.640658 0.578704 0.854804 0.822702 0.792094 0.762895 0.735030 0.708425 0.683013 0.635518 0.592080 0.552291 0.482253 0.821927 0.783526 0.747258 0.712986 0.680583 0.649931 0.620921 0.567427 0.519369 0.476113 0.401878 0.790315 0.746215 0.704961 0.666342 0.630170 0.596267 0.564474 0.506631 0.455587 0.410442 0.334898 0.759918 0.710681 0.665057 0.622750 0.583490 0.547034 0.513158 0.452349 0.399637 0.353830 0.279082 0.730690 0.676839 0.627412 0.582009 0.540269 0.501866 0.466507 0.403883 0.350559 0.305025 0.232568 0.702587 0.644609 0.591898 0.543934 0.500249 0.460428 0.424098 0.360610 0.307508 0.262953 0.193807 0.675564 0.613913 0.558395 0.508349 0.463193 0.422411 0.385543 0.321973 0.269744 0.226684 0.161506 0.649581 0.584679 0.526788 0.475093 0.428883 0.387533 0.350494 0.287476 0.236617 0.195417 0.134588 0.624597 0.556837 0.496969 0.444012 0.397114 0.355535 0.318631 0.256675 0.207559 0.168463 0.112157 0.600574 0.530321 0.468839 0.414964 0.367698 0.326179 0.289664 0.229174 0.182069 0.145227 0.093464 0.577475 0.505068 0.442301 0.387817 0.340461 0.299246 0.263331 0.204620 0.159710 0.125195 0.077887 0.555265 0.481017 0.417265 0.362446 0.315242 0.274538 0.239392 0.182696 0.140096 0.107927 0.064905 0.533908 0.458112 0.393646 0.338735 0.291890 0.251870 0.217629 0.163122 0.122892 0.093041 0.054088 0.513373 0.436297 0.371364 0.316574 0.270269 0.231073 0.197845 0.145644 0.107800 0.080207 0.045073 0.493628 0.415521 0.350344 0.295864 0.250249 0.211994 0.179859 0.130040 0.094561 0.069144 0.037561 0.474642 0.395734 0.330513 0.276508 0.231712 0.194490 0.163508 0.116107 0.082948 0.059607 0.031301 0.456387 0.376889 0.311805 0.258419 0.214548 0.178431 0.148644 0.103667 0.072762 0.051385 0.026084 10% 0.909091 12% 0.892857 14% 0.877193 16% 20% 0.862069 0.833333 0.826446 0.797194 0.769468 0.743163 0.694444 Brett Collins is reviewing his company's investment in a cement plant. The company paid $10,500,000 five years ago to acquire the plant. Now top management is considering an opportunity to sell it. The president wants to know whether the plant has met original expectations before he decides its fate. The company's desired rate of return for present value computations is 10 percent. Expected and actual cash flows follow: (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Expected Actual Year 1 $2,660,000 2,181,200 Year 2 $3,990,000 2,473,800 Year 3 $3,810,000 4,114,800 Year 4 $4,029,900 3,143,322 Year 5 $3,380,000 2,906,800 Required a.&b. Compute the net present value of the expected and actual cash flows as of the beginning of the investment. Note: Negative amounts should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest whole dollar. Net present value (expected) Net present value (actual)

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