APPENDIX A Present Value of $1 Periods 3% 4% 5% 6% 7% 8% 9% 1 971 .962 952 943 .935 926 .917 2 943 925 907 .890 .873 .857 .842 3 915 889 864 .840 .816 .794 .772 4 .888 .855 .823 .792 .763 .735 .708 5 .863 822 .784 .747 .713 .681 .650 6 .837 790 .746 .705 .666 .630 596 7 .813 .760 .711 .665 .623 583 547 8 .789 731 .677 .627 582 540 502 9 .766 .703 .645 592 544 500 460 10 744 .676 .614 558 508 .463 422 11 722 .650 585 527 475 429 388 12 701 .625 557 .497 444 397 356 13 .681 601 530 469 .415 368 326 14 .661 577 505 442 388 340 299 15 642 555 481 .417 362 315 275 16 .623 534 458 394 339 292 252 17 605 513 436 371 317 270 231 18 587 494 416 350 296 250 212 19 570 475 396 331 277 232 194 20 554 456 377 312 258 215 .178 Periods 10% 11% 12% 13% 14% 15% 1 20% 909 901 .893 .885 877 .870 .833 2 .826 .812 797 783 .769 756 3 .694 .751 .731 712 .693 .675 658 4 579 .683 .659 .636 .613 592 5 572 482 .621 593 567 .543 .519 6 497 564 402 535 507 480 456 7 432 513 335 482 452 425 400 8 376 279 467 434 404 376 9 351 424 327 391 233 361 333 10 308 386 284 352 194 322 295 270 247 .162 APPENDIX B Present Value of Annuity of $1 Periods 3% 4% 5% 6% 7% 8% 9% 1 971 962 952 9431 935 926 917 2 1913 1.886 1.859 1.833 1.808 1.783 1.759 3 2.829 2.775 2.723 2.673 2.624 2.577 2.531 4 3.717 3.630 3.546 3.465 3.387 3.312 3.240 5 4.580 4.452 4.329 4.212 4.100 3.993 3.890 6 5.417 5.242 5.076 4.917 4.767 4.623 4.486 7 6.230 6.002 5.786 5.582 5.389 5.206 5.033 8 7.020 6.733 6.463 6.210 5.971 5.747 5.535 9 7.786 7.435 7.108 6.802 6.515 6.247 5.995 10 8.530 8.111 7.722 7.360 7.024 6.710 6.418 11 9.253 8.760 8.306 7.887 7.499 7.139 6.805 12 9.954 9.385 8.863 8.384 7.943 7.536 7.161 13 10.635 9.986 9.394 8.853 8.358 7.904 7.487 14 11.296 10.563 9.899 9.295 8.745 8.244 7.786 15 11,938 11.118 10.380 9.712 9.108 8.559 8.061 16 12.561 11.652 10.838 10.106 9.447 8.851 8.313 17 13.166 12.166 11.274 10.477 9.763 9.122 8.544 18 13.754 12.659 11.690 10.828 10.059 9.372 8.756 19 14.324 13.134 12.085 11.158 10.336 9.604 8.950 20 14.877 13.590 12.462 11.470 10.594 9.818 9.129 Periods 10% 11% 12% 13% 14% 15% 20% 1 909 901 893 885 877 870 833 2 1.736 1.713 1.690 1.668 1.647 1.626 1.528 3 2.487 2.444 2.402 2.361 2.322 2.283 2.106 4 3.170 3.102 3.037 2.974 2.914 2.855 2.589 5 3.791 3.696 3.605 3.517 3.433 3.352 2.991 6 4.355 4.231 4.111 3.998 3.889 3.784 3.326 7 4.868 4.712 4.364 4423 4.288 4.160 3.605 8 5.335 5.146 4.968 4.799 4.639 4.487 9 3.837 5.359 5.537 5.328 5.132 4.946 10 4.772 6.145 4.031 5.889 5.650 5.426 5.216 5.019 4.192 Firm X has the opportunity to invest $243,000 in a new venture. The projected cash flows from the venture are as follows. Use Appendix A and Appendix B Initial investment Revenues Year Year 1 Year 2 Year 3 $ (243,000) $ 37,600 (22,560) $ 37,600 (5,648) $ 37,600 (5,640) 243,000 Before-tax net cash flow $ (243,000) $15,040 Expenses Return of investment $ 31,960 $274,960- Firm X uses an 8 percent discount rate, and its marginal tax rate over the life of the venture will be 20 percent. Required: a-1. Complete the below table to calculate NPV. Assume that the revenues are taxable income, and the expenses are deductible. a-2. Should firm X make the investment? b-1. Complete the below table to calculate NPV. Assume that the revenues are taxable income, but the expenses are nondeductibl b-2. Should firm X make the investment? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Required: a-1. Complete the below table to calculate NPV. Assume that the revenues are taxable income, and the expenses are deductible. a-2. Should firm X make the investment? b-1. Complete the below table to calculate NPV. Assume that the revenues are taxable income, but the expenses are nondeductible. b-2. Should firm X make the investment? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Complete the below table to calculate NPV. Assume that the revenues are taxable income, and the expenses are deductible. (Cash outflows and negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount.) Before-tax cash flow Tax cost Net cash flow Discount factor (8%) Present value NPV Year 0 Year 1 Year 2 Year 3 0 $ 0 $ 0 Req Al Req A2 Req B1 Req 82 Should firm X make the investment? Firm X should make the investment Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Complete the below table to calculate NPV. Assume that the revenues are taxable income, but the expenses are nondeductible. (Cash outflows and negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount.) Before-tax cash flow Tax cost Net cash flow Discount factor (8%) Present value NPV Year 0 Year 1 Year 2 0 $ 0 $ Year 3 Complete this question by entering your answers in the tabs below. Req A1 Req A21 Req B1 Req B2 Should firm X make the Investment? Firm X should make the investment