Appendix A:

Appendix B:

Appendix D:

Dropdowns:

b. According to the net present values, which investment(s) should the firm make?

The firm should make investment(s) [A, B, C, A and B, A and C]

d. According to the net present values, which investment(s) should the firm make?

The firm should make investment(s) [A, B, C, A and B, A and C]

e. According to both the net present values and internal rates of return, which investments should the firm make?

The net present value and internal rate of return lead to [the same decision, different decisions] so the firm should [investment A, select investment B, select investment C, select investments A and B, select investments A and C, resolve the conflict between B and C]

f. The firm should make investment(s) [A, B, C, A and B, A and C]

h. The payback method of capital budgeting selects investment [A, B, C]

Problem 22-04 A firm has the following investment alternatives: Year 1 A $1,085 2 1,085 3 1,085 $3,930 Each investment costs $2,800; investments B and C are mutually exclusive, and the firm's cost of capital is 9 percent. 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. What is the net present value of each investment? Use a minus sign to enter a negative values, if any. Round your answers to the nearest dollar. A: $ B: $ C: $ b. According to the net present values, which investment(s) should the firm make? The firm should make investment(s)[-Select- ] c. What is the internal rate of return on each investment? Round your answers to the nearest whole number. A: % B: % C: d. According to the internal rates of return, which investment(s) should the firm make? The firm should make investment(s) -Select- % e. According to both the net present values and internal rates of return, which investments should the firm make? The net present value and internal rate of return lead to -Select- so the firm should -Select- Cash Inflows B $3,193 h. The payback method of capital budgeting selects which investment? The payback method of capital budgeting selects investment -Select- f. If the firm could reinvest the $3,193 earned in year 1 from investment B at 10 percent, which investment(s) should the firm make? Round your answer to the nearest dollar. Terminal value of investment B: $ The firm should make investment(s)-Select- Would the answer be different if the rate were 12 percent? Round your answer to the nearest dollar. Terminal value of investment B: $ The firm should make investment(s)-Select- . g. If the firm's cost of capital had been 10 percent, what would be investment A's internal rate of return? Round your answer to the nearest whole number. % Problem 22-04 A firm has the following investment alternatives: Year 1 A $1,085 2 1,085 3 1,085 $3,930 Each investment costs $2,800; investments B and C are mutually exclusive, and the firm's cost of capital is 9 percent. 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. What is the net present value of each investment? Use a minus sign to enter a negative values, if any. Round your answers to the nearest dollar. A: $ B: $ C: $ b. According to the net present values, which investment(s) should the firm make? The firm should make investment(s)[-Select- ] c. What is the internal rate of return on each investment? Round your answers to the nearest whole number. A: % B: % C: d. According to the internal rates of return, which investment(s) should the firm make? The firm should make investment(s) -Select- % e. According to both the net present values and internal rates of return, which investments should the firm make? The net present value and internal rate of return lead to -Select- so the firm should -Select- Cash Inflows B $3,193 h. The payback method of capital budgeting selects which investment? The payback method of capital budgeting selects investment -Select- f. If the firm could reinvest the $3,193 earned in year 1 from investment B at 10 percent, which investment(s) should the firm make? Round your answer to the nearest dollar. Terminal value of investment B: $ The firm should make investment(s)-Select- Would the answer be different if the rate were 12 percent? Round your answer to the nearest dollar. Terminal value of investment B: $ The firm should make investment(s)-Select- . g. If the firm's cost of capital had been 10 percent, what would be investment A's internal rate of return? Round your answer to the nearest whole number. % Time Period (e.g., year) 1% 2% 3% 4% 5% 6% 7% 1.180 8% 9% 10% 12% 14% 15% 16% 1 1.010 1.020 1.030 1.040 1.050 1.060 1.070 1.080 1.090 1.100 1.120 1.140 1.150 1.160 1.020 1.040 1.061 1.082 1.102 1.124 1.145 1.166 1.188 1.210 1.254 1.300 1.322 1.346 1.392 3 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.260 1.295 1.331 1.405 1.482 1.521 1.561 1.643 1.041 1.082 1.126 1.170 1.216 1.262 1.311 1.360 1.412 1.464 1.574 1.689 1.749 1.811 1.939 5 1.051 1.104 1.159 1.217 1.276 1.338 1.403 1.469 1.539 1.611 1.762 1.925 2.011 2.100 2.288 2345 6 7 8 Interest Factors for the Future Value of One Dollar 1.062 1.126 1.194 1.265 1.340 1.419 1.501 1.587 1.677 1.072 1.149 1.230 1.316 1.407 1.504 1.606 1.714 1.828 1.083 1.172 1.267 1.369 1.477 1.594 1.718 1.851 1.993 9 1.094 1.195 1.305 1.423 1.551 1.689 1.838 1.999 2.172 10 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2.367 14 15 18% 12 13 11 1.116 1.243 1.384 1.539 1.710 1.898 2.105 2.332 2.580 2.853 3.479 4.226 4.652 5.117 6.176 1.127 1.268 1.426 1.601 1.796 2.012 2.252 2.518 2.813 3.138 3.896 4.818 5.350 5.936 7.287 1.138 1.294 1.469 1.665 1.886 2.133 2.410 2.720 3.066 3.452 4.363 5.492 6.153 6.886 8.599 1.149 1.319 1.513 1.732 1.980 2.261 2.579 2.937 3.342 3.797 4.887 6.261 7.076 7.988 10.147 1.161 1.346 1.558 1.801 2.079 2.397 2.759 3.172 3.642 4.177 5.474 7.138 8.137 9.266 11.973 1.772 1.974 2.195 2.313 2.436 2.700 1.949 2.211 2.502 2.660 2.826 3.186 2.144 2.476 2.853 2.358 2.773 3.252 3.518 3.803 2.594 3.106 3.707 4.046 4.411 3.059 3.278 3.759 4.436 5.234 6.848 20% 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12.839 15.407 16 1.173 1.373 1.605 1.873 2.183 2.540 2.952 3.426 3.970 4.595 6.130 8.137 9.358 10.748 14.129 17 1.184 1.400 1.653 1.948 2.292 2.693 3.159 3.700 4.328 5.054 6.866 9.276 10.761 12.468 16.672 18 1.196 1.428 1.702 2.026 2.407 2.854 3.380 3.996 4.717 5.560 7.690 10.575 12.375 14.463 19.673 19 1.208 1.457 1.754 2.107 2.527 3.026 3.617 4.316 5.142 6.116 8.613 12.056 14.232 16.777 23.214 1.220 1.486 1.806 2.191 2.653 3.207 3.870 4.661 5.604 6.728 9.646 13.743 16.367 19.461 27.393 20 25 1.282 1.641 2.094 2.666 3.386 4.292 5.427 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 18.488 22.186 26.623 31.948 38.337 Time Period (e.g., year) 12345 1% 2% 3% 4% 5% 6% 7% 8% .990 980 971 962 952 943 935 .926 2 980 961 943 925 907 .890 .873 971 942 915 889 864 840 961 924 889 855 823 792 951 906 863 822 784 747 3 67899 10 12345 Interest Factors for the Present Value of One Dollar 9% 10% 12% 14% 15% 16% 24% 18% 20% .847 .833 718 .694 .650 .806 917 909 .893 .877 870 .862 .857 .842 .826 797 .769 .756 .743 816 .794 .772 .751 712 675 658 .641 .609 .579 524 .735 708 683 636 592 572 552 516 482 681 .650 621 567 519 497 476 437 402 11 .896 .804 722 650 585 527 475 .429 .388 350 287 .887 788 .701 .625 557 .497 444 .397 356 .319 257 .879 773 .681 601 530 469 .415 .368 326 .290 .229 .870 758 .661 .577 505 .442 .388 .340 .299 .263 205 .861 743 .642 .555 .481 417 .362 .315 .275 239 183 16 .853 17 18 19 20 25 .763 713 630 942 888 838 790 746 705 .666 596 564 507 .933 871 813 760 711 .665 .623 583 547 513 .452 923 853 789 731 677 627 582 540 502 467 404 914 837 766 703 645 592 544 500 .460 424 .361 905 820 744 676 614 558 508 463 .422 .386 .322 .844 .836 728 623 534 458 394 339 .292 .252 218 163 714 605 513 436 371 .317 .270 231 198 146 700 587 .494 .416 .350 296 250 212 .180 130 .828 .686 570 .475 .396 .331 276 .194 .164 .116 .820 .673 554 .149 .104 .456 377 .312 258 .178 .780 .610 .478 .375 .295 233 .038 30 .742 .552 .412 308 .231 .174 .131 .099 075 057 033 020 015 .184 232 .215 .146 .116 .092 .059 456 432 410 370 335 .400 .376 354 314 279 351 327 305 266 233 .308 284 263 226 .194 144 270 247 227 191 162 .116 179 .423 .373 .341 .291 237 215 195 162 135 094 208 187 168 137 112 076 182 163 145 116 .093 061 .160 .141 125 099 078 .049 .140 .123 108 084 065 .040 275 222 .030 28% .781 .610 477 024 .016 .010 .005 .227 178 139 .108 .085 .066 .052 .040 123 107 093 071 054 032 019 108 093 080 060 .045 026 015 095 .081 069 .051 038 021 .012 083 .070 060 043 031 017 .009 073 061 051 037 026 014 .007 .002 012 007 004 .002 .001 .032 .025 Time Period (e.g., year) 12345 6 7 8 9 10 Interest Factors for the Present Value of an Annuity of One Dollar 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 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 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 13 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 8.756 8.201 7.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 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