1.Blue Spruce Corp. has an 8% required rate of return. It's considering a project that would provide annual cost savings of $70000 for 5 years. The most that Johnson would be willing to spend on this project is

YearPresent Value

of 1 at 8%PV of an Annuity

of 1 at 8%10.9260.92620.8571.78330.7942.57740.7353.31250.6813.993

$176274.

$47670.

$231840.

$279510.

2.Concord, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The equipment will provide annual cost savings of $12000 and will be depreciated straight-line over its useful life with no salvage value. Concord requires a 10% rate of return.

Present Value of an Annuity of 1Period 8%9% 10%11% 12%15% 64.6234.4864.3554.2314.1113.784

What is the approximate net present value of this investment?

$24000

$5832

$4260

$2771

3.Use the following table,

Present Value of an Annuity of 1 Period 8%9% 10%10.9260.9170.90921.7831.7591.73632.5772.5312.487

A company has a minimum required rate of return of 8%. It is considering investing in a project that costs $298658 and is expected to generate cash inflows of $118000 each year for three years. The approximate internal rate of return on this project is

10%.

the IRR on this project cannot be approximated.

8%.

9%.