appendix aappendix bappendix d

A firm's cost of capital is 9 percent. The firm has three investments to choose among; the cash flows of each are as follows: Cash Inflows Year A B $ 1,568 1 2 $ 533 533 3 533 4 $2,050 Each investment requires a $1,400 cash outlay, and investments B and C are mutually exclusive. Use Appendix A, Appendix B and Appendix D to answer the questions. Assume that the investments are not mutually exclusive and there are no budget restrictions. a. Which investment(s) should the firm make according to the net present values? Use a minus sign to enter negative values, if any. Round your answers to the nearest dollar A: $ B: $ C: $ The firm should make investment(s) B b. Which investment(s) should the firm make according to the internal rates of return? Round your answers to the nearest whole number. A: % B: % C: % The firm should make investment(s) C c. If all funds from investment C are reinvested at 10 percent, which investment(s) should the firm make? Round your answer to the nearest dollar. Terminal value of investment C: $ The firm should make investment(s) C Would your answer be different if the reinvestment rate were 9 percent? Round your answer to the nearest dollar. Terminal value of investment C: $ The firm should make investment(s) B Interest Factors for the Future Value of One Dollar 8% 9% 10% 12% 14% 15% 16% 18% 20% Time Period (e.g., year) 1 2. 3 4 5 AWN 1% 2% 3% 4% 5% 6% 7% 1.010 1.020 1.030 1.040 1.050 1.060 1.070 1.020 1.040 1.061 1.082 1.102 1.124 1.145 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.041 1.082 1.126 1.170 1.216 1.262 1.311 1.051 1.104 1.159 1.217 1.276 1.338 1.403 1.080 1.166 1.260 1.360 1.469 1.090 1.188 1.295 1.412 1.539 1.100 1.210 1.331 1.464 1.611 1.120 1.254 1.405 1.574 1.762 1.140 1.300 1.482 1.689 1.925 1.150 1.322 1.521 1.749 2.011 1.160 1.346 1.561 1.811 2.100 1.180 1.392 1.643 1.939 2.288 1.200 1.440 1.728 2.074 2.488 6 7 8 9 10 1.062 1.126 1.194 1.265 1.340 1.419 1.501 1.072 1.149 1.230 1.316 1.407 1.504 1.606 1.083 1.172 1.267 1.369 1.477 1.594 1.718 1.094 1.195 1.305 1.423 1.551 1.689 1.838 1.105 1.219 1.344 1.480 1.629 1.791 1.967 1.587 1.714 1.851 1.999 2.159 1.677 1.828 1.993 2.172 2.367 1.772 1.974 2.195 2.313 1.949 2.211 2.502 2.660 2.144 2.476 2.853 3.059 2.358 2.773 3.252 3.518 2.594 3.106 3.707 4.046 2.436 2.826 3.278 3.803 4.411 2.700 3.186 3.759 4.436 5.234 2.986 3.583 4.300 5.160 6.192 11 12 13 14 15 1.116 1.243 1.384 1.539 1.710 1.898 2.105 1.127 1.268 1.426 1.601 1.796 2.012 2.252 1.138 1.294 1.469 1.665 1.886 2.133 2.410 1.149 1.319 1.513 1.732 1.980 2.261 2.579 1.161 1.346 1.558 1.801 2.079 2.397 2.759 2.332 2.518 2.720 2.937 3.172 2.580 2.813 3.066 3.342 3.642 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 4.652 5.350 6.153 7.076 8.137 5.117 5.936 6.886 7.988 9.266 6.176 7.287 8.599 10.147 11.973 7.430 8.916 10.699 12.839 15.407 16 17 18 19 20 1.173 1.373 1.605 1.873 2.183 2.540 2.952 1.184 1.400 1.653 1.948 2.292 2.693 3.159 1.196 1.428 1.702 2.026 2.407 2.854 3.380 1.208 1.457 1.754 2.107 2.527 3.026 3.617 1.220 1.486 1.806 2.191 2.653 3.207 3.870 3.426 3.700 3.996 4.316 4.661 3.970 4.328 4.717 5.142 5.604 4.595 5.054 5.560 6.116 6.728 6.130 8.137 9.358 10.748 6.866 9.276 10.761 12.468 7.690 10.575 12.375 14.463 8.613 12.056 14.232 16.777 9.646 13.743 16.367 19.461 14.129 16.672 19.673 23.214 27.393 18.488 22.186 26.623 31.948 38.337 25 1.282 1.641 2.094 2.666 3.386 4.292 5.427 6.848 8.623 10.835 17.000 26.462 32.919 40.874 62.688 95.396 30 1.348 1.811 2.427 3.243 4.322 5.743 7.612 10.063 13.268 17.449 29.960 50.950 66.212 85.850 143.370 237.370 Interest Factors for the Present Value of One Dollar Time Period (e.g. 1% 5% 6% 7% 8% 10% 12% 14% 24% year) 1 2 3 4 5 UAWN- 2% 980 1961 1942 .924 .906 990 980 971 1961 951 3% 4% .971 962 .943 .925 915 .889 .855 .863 822 952 .907 .864 .823 .784 .943 .890 .840 .792 .747 .806 .650 9% 917 .842 .772 .708 .650 .935 .873 .816 .763 .713 .926 .857 .794 .735 .681 .909 .826 .751 .683 .621 .889 15% .870 .756 .658 .572 497 .893 .797 .712 .636 .567 16% .862 .743 .641 .552 476 .877 .769 .675 .592 .519 18% .847 .718 .609 1516 437 20% .833 .694 579 482 402 28% .781 .610 .477 .373 .291 524 423 .341 6 7 8 9 10 000 942 .933 .923 .914 .905 .888 .871 .853 .837 .820 .838 .813 .789 .766 .744 .790 .760 .731 .703 .676 .746 .711 .677 .645 .614 .705 .665 .627 .592 .558 .666 .630 .623 583 1582 .540 .544 .500 .508 .463 1596 547 .502 460 422 .564 .513 467 424 .386 .507 .452 .404 361 .322 .456 .400 .351 .308 .270 432 .376 .327 .284 .247 410 .354 .305 .263 .227 .370 .314 .266 .226 .191 335 .279 .233 .194 .162 .275 .222 .179 .144 .116 .227 .178 .139 . 108 .085 .287 .257 11 12 13 14 15 .896 .887 .879 .870 .861 .804 .788 .773 .758 .743 .722 .701 .681 .661 .642 .650 .625 .601 577 .555 .585 .557 .530 .505 481 .527 .497 .469 .442 .417 475 444 415 .388 .362 429 .397 .368 .340 .315 388 1356 .326 .299 .275 .350 .319 .290 .263 .239 .229 .237 .208 .182 .160 .140 .215 .187 .163 .141 .123 .195 .168 .145 .125 .108 .162 .137 .116 .099 .084 .135 .112 .093 .078 .065 .094 .066 .076 052 .061 .040 .049 .032 .040.025 .205 .183 16 17 18 19 20 .853 .844 .836 .828 .820 .728 .714 .700 .686 .673 .623 .534 .605 513 494 .570 .475 .554 456 .587 .458 .436 416 .396 377 .394 .371 .350 .331 .312 .339 .317 .296 .276 .258 .292 .270 .250 .232 .215 .252 .231 .212 .194 .178 .218 .198 .180 .164 .149 .163 .146 .130 .116 .104 .123 .107 .093 .108 .093 .080 .095 .081 .069 .083 .070.060 .073 .061.051 .071 .060 .051 .043 .037 .054 .045 .038 .031 .026 .032 .019 .026 015 .021 .012 .017 .009 .014 .007 25 .780 .610 .478 375 .295 .233 .184 .146 .116 .092 .059 .038 .030 .024 .016 .010 .005 .002 30 .742 .552 .412 308 .231 .174 .131 .099 .075 .057 033 .020 .015 .012 .007 .004 .002 .001 Interest Factors for the Present Value of an Annuity of One Dollar Time Period (e.g. year) 1 2 3 4 5 U AWN 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1.674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 7 8 9 10 ON 00 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 11 12 13 14 15 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 16 17 18 19 20 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.0973.539 3.109 2.770 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776 30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.979 4.160 3.569 3.124 2.778