24.6hw

PV of $1 Table

FV of $1 Table

PVA of $1 Table

FVA of $1 Table

Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,000. Project 2 requires an initial investment of $99,900. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1 ) (Use appropriate factor(s) from the tables provided.) Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Table B.1* Present Value of 1 p=1/(1+i)n years from today? Using the factors of n=12 and i=5% (12 semiannual periods and a semiannual rate of 5\%), the factor is 0.5568 . You would need to invest $2,784 today ( $5,000 0.5568 ). Table B. 2 Future Value of 1 f=(1+i)n the factors of n=20 and i=2%(20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 ( $3,0001.4859). Table B. 3 Present Value of an Annuity of 1 p=[11/(1+i)n]/i annual interest rate of 9% ? For ( n=10,i=9% ), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ( $2,0006.4177 ). Table B. 4 Future Value of an Annuity of 1 f=[(1+i)n1]/i annual interest rate of 8% ? For (n=6,i=8%), the FV factor is 7.3359.$4,000 per year for 6 years accumulates to $29,343.60 ( $4,0007.3359)