1. 13.49 Use the template in Example 13.12 to accept or reject the following proposal developed by Mighty Foundation, Inc.

(a) Use the information below.

(b) Change the inflation rate to 5% per year. All other parameters remain the same. Table Summary: Table divided into four columns shows data to evaluate a proposal based on the inflation rate change. The column headers are marked from left to right as: asset; depreciation; financing; and evaluation. Asset Depreciation Financing Evaluation First cost: $1,500,000 Method: SL Loan: $500,000 MARR: 12% Useful life: 8 years Recovery: 8 years Length: 6 years Inflation rate: 0% Salvage: $150,000 Interest rate: 4% Effective tax rate: 21% GI: $500,000/year Compounding: Annual Asset Depreciation Financing Evaluation AOC: $200,000/year