18. [-/2 Points] DETAILS BRECMBC9 12.III.026. MY NOTES ASK YOUR TEACHER PRACTICE ANOTHER You are the vice president of finance for a manufacturer of scuba diving gear. The company is planning a major plant expansion in 5 years. You have decided to start a sinking fund to accumulate the funds necessary for the project. Your company's investments yield 12% compounded quarterly. It is estimated that $4,000,000 in today's dollars will be required; however, the inflation rate on construction costs and plant equipment is expected to average 7% per year for the next 5 years. Forty Years of Changing Inflation Rates 11.0 10.5 9.0 7.0 7.0 6.5 1 Insani 5.5 5.0 5.0 4.0 3,6 3.6 3.0 3.0 2.8 3.4 -2.6 3.1 3.0 2.5 2.0 2.1 1.5 1.0 0.12 -1.0 -0.34 '03'05 '07 '09'11 '77 '79 181 '83 '85 '87 '89 '91 "93 '95 '99 '01 '13 '15 '17 '97 Year (3) (a) Use the compound interest concept from Chapter 11 to determine how much in $) will be required for the project, taking inflation into account. (Use Table 11-1. Round your answer to the nearest cent.) (b) What sinking fund payments (in $) will be required at the end of every 3-month period to accumulate the necessary funds? (Use Table 12-1. Round your answer to the nearest cent.) TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1 2% 3% 4% 6% 7% 8% Periods 1 5% 0.95238 Periods 1 0.94340 0.93458 0.92593 2 2 3 % 1% 0.99502 0.99010 1.98510 1.97040 2.97025 2.94099 3.95050 3.90197 4.92587 4.85343 0.98522 1.95588 2.91220 3.85438 4.78264 0.98039 1.94156 2.88388 3.80773 4.71346 0.97087 1.91347 2.82861 3.71710 4.57971 0.96154 1.88609 2.77509 3.62990 4.45182 1.83339 2.67301 3 1.85941 2.72325 3.54595 4.32948 1.80802 2.62432 3.38721 4.10020 1.78326 2.57710 3.31213 3.99271 4 4 3.46511 4.21236 5 5 6 5,07569 4.62288 6 5.41719 6.23028 7 5.69719 6.59821 7.48593 5.78637 7 5.89638 5.79548 6.86207 6.72819 7.82296 7.65168 8.77906 8.56602 9.73041 9.47130 8 5.60143 6.47199 7.32548 8.16224 8.98259 5.24214 6.00205 6.73274 7.43533 8.11090 6.46321 4.91732 5.58238 6.20979 6.80169 7.36009 4.76654 5.38929 5.97130 6.51523 7.02358 7.01969 7.78611 8.53020 5.20637 5.74664 6.24689 8 9 8.36052 9.22218 9 7.10782 7.72173 10 6.71008 10 7.49867 11 11 12 12 10.67703 10.36763 10.07112 9.78685 9.25262 8.76048 8.30641 11.61893 11.25508 10.90751 10.57534 9.95400 9.38507 8.86325 12.55615 12.13374 11.73153 11.34837 10.63496 9.98565 9.39357 13.48871 13.00370 12.54338 12.10625 11.29607 10.56312 9.89864 14.41662 13.86505 13.34323 12.84926 11.93794 11.11839 10.37966 13 7.88687 8.38384 8.85268 9.29498 9.71225 7.13896 7.53608 7.90378 8.24424 7.94269 8.35765 8.74547 9.10791 13 14 14 15 8.55948 15 16 17 16 17 18 15.33993 14.71787 14.13126 13.57771 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 16.25863 15.56225 14.90765 14.29187 13.16612 12.16567 11.27407 10.47726 9.76322 9.12164 17.17277 16.39827 15.67256 14.99203 13.75351 12.65930 11.68959 10.82760 10.05909 9.37189 18.08236 17.22601 16,42617 15.67846 14,32380 13.13394 12,08532 11.15812 10.33560 9.60360 18.98742 18.04555 17.16864 16.35143 14.87747 13.59033 12.46221 11.46992 10.59401 9.81815 18 19 19 20 20 21 21 22 19.88798 18.85698 17.90014 17.01121 15.41502 14.02916 12.82115 11.76408 10.83553 10.01680 20.78406 19.66038 18.62082 17.65805 15.93692 14.45112 13.16300 12.04158 11.06124 10.20074 21.67568 20.45582 19.33086 18.29220 16.44361 14.85684 13.48857 12.30338 11.27219 10.37106 22.56287 21.24339 20.03041 18.91393 16.93554 15.24696 13.79864 12.55036 11.46933 10.52876 23.44564 22.02316 20.71961 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478 22 23 23 24 24 25 25 26 26 27 27 28 24.32402 22.79520 21.39863 20.12104 17.87684 15.98277 14.37519 13.00317 11.82578 10.80998 25.19803 23.55961 22.06762 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516 26.06769 24.31644 22.72672 21.28127 18.7641116.66306 14.89813 13.40616 12.13711 11.05108 26.93302 25.06579 23.37608 21.84438 19.18845 16.98371 15.14107 13.59072 12.27767 11.15841 27.79405 25.80771 24.01584 22.39646 19.60044 17.29203 15.37245 13.76483 12.40904 11.25778 28 29 29 30 30 31 32 28.65080 26.54229 24.64615 22.93770 20.00043 17.58849 15.59281 13.92909 12.53181 11.34980 29.50328 27.26959 25.26714 23.46833 20.38877 17.87355 15.80268 14.08404 12.64656 11.43500 30.35153 27.98969 25.87895 23.98856 20.76579 18.14765 16.00255 14.23023 12.75379 11.51389 31.19555 28.70267 26.48173 24.49859 21.13184 18.41120 16.1929014.36814 12.85401 11.58693 32.03537 29.40858 27.07559 24.99862 21.48722 18.66461 16.37419 14.49825 12.94767 11.65457 32.87102 30.10751 27.66068 25.48884 21.83225 18.90828 16.54685 14.62099 13.03521 11.71719 31 32 33 34 33 34 35 35 36 36 (1 + i)" - 1 The values in Table 12-2 were generated by the formula and rounded to rate per period and n is the total number of periods. i(1 + i)" decimal places, where i is interest Periods Periods 1 14% 0.87719 1.64666 17% 0.85470 1 2 9% 10% 0.91743 0.90909 1.75911 1.73554 2.53129 2.48685 3.23972 3.16987 3.88965 3.79079 12% 0.89286 1.69005 2.40183 3.03735 11% 0.90090 1.71252 2.44371 3.10245 3.69590 2 13% 0.88496 1.66810 2.36115 2.97447 3.51723 15% 0.86957 1.62571 2.28323 2.85498 16% 0.86207 1.60523 2.24589 2.79818 18% 0.84746 1.56564 2.17427 2.69006 3.12717 3 1.58521 2.20958 2.74324 2.32163 3 4 4 2.91371 3.43308 5 3.60478 3.35216 3.27429 3.19935 5 6 6 3.78448 4.16042 7 7 4.48592 4.35526 4.23054 4.11141 5.03295 4.86842 4.71220 4.56376 5.53482 5.33493 5.14612 4.96764 5.99525 5.75902 5.53705 5.32825 6.41766 6.14457 5.88923 5.65022 3.99755 4.42261 4.79877 5.13166 5,42624 3.88867 4.28830 4.63886 4.94637 8 3.49760 3.81153 4,07757 3.68474 4.03857 4.34359 4.60654 4.83323 3.58918 3.92238 4.20716 4.45057 4.65860 4.48732 4.77158 8 9 9 4.30302 4.49409 10 5.21612 5.01877 10 11 11 5.02864 5.19711 12 12 6.80519 6.49506 7.16073 6.81369 7.48690 7.10336 7.78615 7.36669 8.06069 7.60608 6.20652 6.49236 6.74987 6.98187 7.19087 5.93770 6.19437 6.42355 6.62817 13 5.68694 5.91765 6.12181 6.30249 6.46238 5.45273 5.23371 5.66029 5.42062 5.84236 5.58315 6.00207 5.72448 6.14217 5.84737 4.83641 4.98839 5.11828 5.22930 4.65601 4.79322 4.90951 5.00806 5.09158 5.34233 5.46753 5.57546 13 14 14 15 6.81086 5.32419 15 16 5.66850 16 17 17 18 8.31256 7.82371 8.54363 8.02155 8.75563 8.20141 8.95011 8.36492 9.12855 8.51356 7.37916 7.54879 7.70162 7.83929 7.96333 6.97399 6.60388 7.11963 6.72909 7.24967 6.83991 7.36578 6.93797 7.46944 7.02475 6.26506 6.37286 6.46742 6.55037 6.62313 5.95423 6.04716 6.12797 6.19823 6.25933 5.40529 5.47461 5.53385 5.58449 5.62777 5.74870 5.81785 5.87746 5.92884 5.16235 5.22233 5.27316 5.31624 5.35275 18 19 19 20 20 6.68696 21 8.07507 8.17574 6.74294 22 21 22 23 24 25 9.29224 8.64869 9.44243 8.77154 9.58021 8,88322 9.70661 8.98474 9.82258 9,07704 7.56200 7.64465 7.71843 7.78432 7.84314 8.26643 8.34814 8.42174 7.10155 7.16951 7.22966 7.28288 7.32998 6.31246 6.35866 6.39884 6.43377 6.46415 6.79206 6.83514 5.97314 5.66476 6.01133 5.69637 6.04425 5.72340 6,07263 5.74649 6.09709 5.76623 23 5.38368 5.40990 5.43212 5.45095 5.46691 24 6,87293 25 26 6.49056 26 27 28 9.92897 9,16095 10.02658 9.23722 10.11613 9.30657 10.19828 9.36961 10.27365 9.42691 8.48806 8.54780 8.60162 8.65011 8.69379 7.89566 7.94255 7.98442 27 7.37167 7.40856 7.44120 6.90608 6.93515 6.96066 6.98304 7.00266 5.48043 5.49189 5.50160 6.11818 5.78311 6.13636 5.79753 6.15204 5.80985 6.16555 5.82039 6,17720 5.82939 6.51353 6.53351 6.55088 6.56598 28 29 7.47009 5.50983 29 8.02181 8.05518 30 7.49565 5.51681 30 31 31 8.73315 8.76860 8.08499 8.11159 32 32 33 33 10.34280 9.47901 10.40624 9.52638 10.46444 9.56943 10.51784 9.60857 10.56682 9.64416 10.61176 9.67651 7.51828 7.01988 7.53830 7.03498 7.55602 7.04823 7.57170 7.05985 7.58557 7.07005 7.59785 7.07899 8.80054 8.13535 8.82932 8.15656 8.85524 8.17550 8.87859 8.19241 6.57911 6.59053 6.60046 6.60910 6.61661 6.62314 6.18724 5.83709 6.19590 5.84366 6.20336 5.84928 6.20979 5.85409 6.21534 5.85820 6.22012 5.86171 5.52272 5.52773 5.53197 5.53557 5.53862 5.54120 34 34 35 35 36 36 (1 + "-1 The values in Table 12-2 were generated by the formula and rounded to five decimal places where i is the interest rate per period and n is the total number of periods. i(1 + i)" TABLE 11-1 Compound Interest Table (Future Value of $1 at Compound Interest) 1% 2% 3% 5% 6% 7% 8% Periods Periods 1 2 3 4 5 1.00500 101003 1.01508 1.0 2015 102525 101000 102010 1.03030 1.04060 1.05101 1.01500 1.03023 1.04568 1.061 36 1.07728 102000 1.04040 1.06121 1.08243 L10408 103000 1.06090 1.09273 1.1 2551 L15927 104000 108160 1.12486 1.16986 1.21665 105000 110250 1.1 5763 1.21551 1.27628 106000 11 2360 1.19102 1.26248 1.33823 107000 1.14490 1.22504 1.31080 140255 1.08000 1.16640 1.25971 1.36049 1.46933 1 2 3 4 5 6 7 8 9 10 1.03038 1.03553 104071 1.04591 1.05114 1.06152 1.07214 108286 1.09369 1.10462 1.09344 1.10984 1.12649 1.14339 1.16054 1.1 2616 1.14869 1.17166 1.19509 1.21899 1.19405 1.22987 1.26677 1.30477 1.34392 1.26532 1.31593 1.36857 142331 1.48024 1.34010 1.40710 1.47746 1.55133 1.62889 1.41852 1.50363 1.59385 168948 1.79085 1.50073 160578 1.71819 1.83846 1.96715 1.58687 1.71382 1.85093 1.99900 2.15892 6 7 8 9 10 11 12 13 14 15 1.05640 106168 1.06699 1.07232 1.07768 LI 1567 1.1 2683 1.13809 1.14947 1.1 6097 1.17795 1.19562 1.21355 1.231 76 1.25023 1.24337 1.26824 1.29361 1.31948 1.34587 1.38423 1.42576 146853 1.51259 1.55797 1.53945 160103 166507 1.73168 1.80094 1.7 1034 1.79586 1.88565 1.97993 2.07893 1.89830 2.01220 2.13293 2.26090 2.39656 2.10485 2.25219 2.40985 2.57853 2.75203 2.33164 2.51817 2.71 962 2.93719 3.17217 11 12 13 14 15 16 17 18 19 20 1.08307 108849 1.09393 109940 L.10490 1.1 7258 1.18430 1.19615 1.20811 1.2.2019 1.26899 1.28802 1.30734 1.32695 1.34686 1.37279 140024 1.42825 1.45681 148595 160471 165285 1.70243 1.75351 1.80611 1.87298 194790 2.02582 2.10685 2.19112 2.18287 2.29202 2.40662 2.52695 265330 2.54035 2.69277 2.85434 3,02560 3.20714 2.95216 3.15882 3.37993 3.61653 3.86968 3.42 594 3.70002 3.99602 4.31 570 4.66096 16 17 18 19 20 21 22 23 24 25 1.1 1042 1.1 1597 1.12155 1.12716 1.13280 1.23239 1.24472 1.25716 1.26973 1.28243 1.36706 1.38756 1.40838 1.42950 1.45095 1.51567 1.54598 1.57690 160844 164061 1.86029 1.91610 1.97359 2.03279 2.09378 2.27877 2.36992 2.46472 2.56330 2.66584 2.78596 2.92526 3.07152 3.22510 3.38635 3.39956 3,60354 3.81975 4.04893 4.29187 4.1 4056 443040 4.74053 5.07237 5.42743 5,03383 5.43654 5.87146 6.34118 6.84848 21 22 23 24 25 Periods 1 2 3 4 5 9% 1.09000 1.18810 1.29503 1.41158 153862 10% 1.10000 1.2 1000 1.33100 1.46410 1.6 1051 11% L11000 1.232 10 1.36763 1.51807 1.68506 12% 1.1 2000 1.25440 140493 1.57352 1.76234 13% 1.1 3000 1.27690 1.44290 1.63047 1.84244 14% 1.14000 1.29460 1.48154 1.68896 1.92541 15% 1.15000 1.32250 1.52088 1.74901 2.01136 16% 1.16000 1.34560 1.56090 1.81064 2.10034 17% 1.1 7000 1.36890 160161 187389 2.19245 18% 1.18000 L.39240 1.64203 1.93878 2.28776 Periods 1 2 3 4 5 6 7 8 9 10 167710 1.82804 1.99256 2.17189 2.36736 1.77156 1.94872 2.14359 2.35795 2.59374 1.87041 2.07616 2.30454 2.55804 2.83942 1.97382 2.21068 2.47596 2.77308 3.10585 2.08195 2.35261 265844 3.00404 3.39457 2.19497 2.50227 2.85259 3.25195 3.70722 2.31.306 2.66002 3.05902 3.51788 4.04556 2.43640 2.82622 3.27841 3.80296 441144 2.56516 3.00124 3.51145 4.10840 4.80683 2.69955 3.18547 3.75886 4.43545 5.23384 6 7 8 9 10 11 12 13 14 15 2.58043 2.81266 3,06580 3.34173 3.64248 2.85312 3.13843 3.45227 3.79750 4.17725 3.151 76 3.49845 3.88328 4.31044 4.78459 3.47855 3.89598 4.36349 4.88711 5.47357 3.83586 4.33452 4.89801 5.53475 6.25427 4.22623 4.81790 5.49241 6.26135 7.13794 4.65239 5.35025 6.15279 7.07571 8.13706 5.1 1726 5.93603 6.88579 7.98752 9.26552 5.62399 6.58007 7.69868 9.00745 10.53872 6.17593 7.28759 8,59936 10.14724 11.97 375 11 12 13 14 15 16 17 18 19 20 3.97031 4.32763 4.71712 5.14166 5.60441 4.59497 5.05447 5.55992 6.1 1591 6.72750 5.31089 5.89509 6.54355 7.26334 8.06231 6.13039 6.86604 7.68997 8.61276 9.64629 7.06733 7.98608 9.02427 10.19742 11.52309 8.13725 9.27646 10.57517 12.05569 13.74349 9.35762 10.76126 12.37545 14.23177 16.36654 10.74800 12.46768 14.46251 16.77652 19.46076 12.33030 14.42646 16.87895 19.74838 23.10560 14.12902 16.67225 19.67325 23.21444 27.39303 16 17 18 19 20 21 22 23 24 25 6.10881 6.65860 7.25787 791108 8.62308 7.40125 8.1 4027 8.95430 9.84973 10.83471 8.94917 9.93357 11.02627 1 2.23916 13.58546 10.80385 13.02109 12.10031 14.71383 13.55235 16.62663 15.1 7863 18.78809 17.00006 21.23054 15.66758 17.86104 20.36158 23.21221 26.46192 18.82152 2164475 24.89146 28.62518 32.91895 22.57448 26.18640 30.37622 35.23642 40.87424 27.03355 3162925 37.00623 43.29729 50.65783 32.32378 38.14206 45.00763 53.10901 62.66863 21 22 23 24 25 The values in Table 11-1 were generated by the formula FV = (1 + rounded to five decimal places, where i is the interest rate per period and n is the total number of periods