Annual cash inflows that will arise from two competing investment projects are given below: Year 1 2 Investment B Investment A $ 7,000 $ 10,000 8,000 9,000 4 9,000 10,000 8,000 7,000 $ 34,000 $ 34,000 3 The discount rate is 5%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: Compute the present value of the cash inflows for each investment. Present Value of Cash Flows Year Investment A Investment B 1 2 3 4 EXHIBIT 14B-1 Present Value of $1; 1(1+r) n Periods 4% 1 0.962 5% 6% 0.952 0.943 2 0.925 7% 0.935 0.907 0.890 0.873 3 4 5 6 7 0.760 8 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 9 0.703 0.645 0.592 10 0.676 0.614 0.558 11 0.544 0.508 0.650 0.585 0.527 0.475 0.429 0.500 0.460 0.424 0.391 0.361 0.507 | 0.480 | 0.456 | | 0.432 0.452 0.425 0.400 0.376 0.404 0.376 0.351 0.327 0.333 0.308 0.284 0.463 0.422 0.386 0.352 0.322 0.295 | 0.270 | 0.247 0.388 0.350 0.317 0.287 0.261 12 0.625 0.557 0.497 0.444 0.397 13 0.601 14 0.577 0.505 0.442 0.388 0.340 0.299 15 0.555 0.481 0.417 0.356 0.319 0.530 0.469 0.415 0.368 0.326 0.290 0.263 0.362 0.315 0.275 0.239 0.286 0.257 0.231 0.258 0.229 | 0.204 0.182 | 0.163 0.232 0.205 0.181 0.160 0.141 0.209 0.183 0.160 0.140 | 0.123 16 0.534 0.458 0.394 0.339 0.292 0.252 17 0.513 18 19 0.396 0.331 0.277 0.123 0.107 0.436 0.371 0.317 0.270 0.231 0.125 0.108 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.475 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.218 0.188 0.163 0.141 0.198 0.170 0.146 20 21 22 0.456 0.377 0.312 0.258 0.439 0.359 0.294 0.242 0.422 0.342 0.278 0.226 0.112 | 0.093 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 | 0.833 0.826 0.820 0.813 0.806 0.800 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.661 0.650 0.640 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 | 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0.746 0.705 0.666 | 0.630 | 0.596 | 0.564 | 0.535 0.410 | 0.390 | 0.370 | 0.352 0.335 0.319 0.303 0.289 0.275 0.262 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.354 0.333 0.314 0.296 | 0.279 | 0.263 | 0.249 | 0.235 0.222 0.210 0.305 0.285 0.266 0.249 0.233 0.218 0.204 | 0.191 0.179 0.168 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.086 0.168 0.152 0.137 0.124 | 0.112 0.102 0.092 0.083 0.076 0.069 0.145 0.130 0.116 0.104 | 0.093 | 0.084 | 0.075 | 0.068 0.061 0.055 0.125 0.111 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.108 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 0.070 | 0.060 0.051 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 0.215 | 0.178 | 0.149 | 0.124 | | 0.104 | 0.087 | 0.073 | 0.061 | 0.051 | 0.043 | 0.037 | 0.031 | 0.026 | | 0.022 | | 0.019 | 0.016 | 0.014 || 0.012 0.199 0.164 0.135 0.237 0.215 0.208 0.187 23 24 0.390 0.310 0.247 0.197 25 0.375 0.295 0.233 26 27 28 29 30 40 0.208 0.142 0.174 0.131 0.097 | 0.067 0.077 | 0.064 | | 0.053 | 0.044 | 0.037 | 0.031 0.026 0.022 | 0.018 | 0.015 0.013 0.011 0.009 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 | 0.015 | 0.012 | 0.010 | 0.009 0.007 0.006 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.333 0.255 0.196 | 0.150 | 0.116 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.005 0.004 0.003 0.002 0.002 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 | 0.014 0.004 0.003 0.002 0.002 0.002 0.308 0.231 0.099 0.075 0.057 | 0.044 | 0.033 0.026 | 0.020 | 0.015 | 0.012 0.003 0.003 0.002 0.002 0.001 0.046 | 0.032 | 0.022 | 0.015 | 0.011 0.008 0.005 | 0.004 0.003 0.000 0.000 0.000 0.000 0.000 0.012 0.010 0.008 0.006 0.011 0.008 0.006 0.005 0.009 | 0.007 | 0.005 || 0.004 0.002 0.001 0.001 0.001 EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears; 1r [1-1(1+r)n] Periods 4% 5% 6% 1 2 0.962 0.952 0.943 1.886 3 4 3.630 3.546 5 6 5.242 5.076 4.917 4.767 7 6.002 5.786 5.582 5.389 8 6.733 6.463 6.210 5.971 9 7.435 10 8.111 7.108 6.802 6.515 7.722 7.360 7.024 11 8.760 8.306 7.887 7.499 12 9.385 13 9.986 8.863 8.384 7.943 9.394 8.853 8.358 14 10.563 9.899 9.295 8.745 15 11.118 10.380 9.712 9.108 16 11.652 10.838 10.106 9.447 17 12.166 11.274 10.477 9.763 18 12.659 11.690 | 10.828 10.059 9.372 19 13.134 12.085 | 11.158 | 10.336 20 21 22 23 24 25 26 27 28 29 30 17.292 15.372 13.765 | 12.409 | 11.258 | 10.274 | 9.427 40 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 | 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.246 | 2.210 | 2.174 2.140 | 2.106 2.074 | 2.042 2.011 1.981 1.952 3.465 |3.387 | 3.312 3.240 | 3.170 3.102 | 3.037 2.974 2.914 2.855 |2.798 2.743 2.690 | 2.639 | 2.589 | 2.540 | 2.494 | 2.448 | 2.404 2.362 4.452 4.329 4.212 4.100 3.993 3.890 3.791 | 3.696 | 3.605 | 3.517 | 3.433 3.352 | 3.274 3.199 | 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 | 3.326 | 3.245 3.167 3.092 | 3.020 | 2.951 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 6.247 5.995 5.759 5.537 5.328 5.132 4.946 | 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 6.710 6.418 6.145 5.889 5.650 | 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 | 4.327 4.177 | 4.035 3.902 3.776 3.656 7.536 7.161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 | 4.278 | 4.127 3.985 3.851 3.725 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 8.244 7.786 7.367 6.982 6.628 6.302 6.002 | 5.724 5.468 5.229 5.008 4.802 | | 4.611 4.432 4.265 4.108 3.962 3.824 8.559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 | 4.489 4.315 4.153 4.001 3.859 8.851 8.313 7.824 7.379 6.974 6.604 | 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 9.122 8.544 8.022 7.549 | 7.120 | 6.729 | 6.373 | 6.047 | 5.749 5.475 5.222 | 4.990 | 4.775 || 4.576 | 4.391 | 4.219 || 4.059 3.910 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 9.604 | 8.950 | 8.365 | 7.839 | 7.366 | 6.938 | 6.550 | 6.198 5.877 | 5.584 5.316 5.070 | 4.843 4.635 | 4.442 | 4.263 4.097 3.942 13.590 12.462 11.470 | 10.594 9.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 | 4.279 | 4.110 3.954 14.029 12.821 11.764 | 10.836 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 | 4.476 4.292 4.121 3.963 14.451 13.163 | 12.042 | 11.061|10.201 || 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 | | 4.488 | 4.302 | 4.130 | 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 | 4.925 | 4.703 | 4.499 | 4.311 4.137 3.976 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.147 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 | 4.956 4.728 4.520 4.328 4.151 3.988 16.330 14.643 | 13.211 | 11.987|10.935| 10.027 | 9.237 | | 8.548 | 7.943 | 7.409 6.935 6.514 6.136 5.798 5.492 | 5.215 4.964 | 4.734 | | 4.524 || 4.332 4.154 3.990 16.663 14.898 13.406 12.137 | 11.051 | 10.116 9.307 | 8.602 7.984 | 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 | 4.335 4.157 3.992 16.984 15.141 13.591 12.278 | 11.158 | 10.198 | 9.370 | 8.650 | | 8.022 | | 7.470 | 6.983 | 6.551 | 6.166 | | 5.820 5.510 5.229 4.975 4.743 | 4.531 4.337 4.159 3.994 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.235 | 4.979 | 4.746 | 4.534 | | 4.339 4.160 3.995 5.258 4.997 4.760 | 4.544 | 4.347 4.166 3.999