Appendix B:

You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 14 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project x (Videotapes of the Weather Report) ($30,000 Investment) Year Cash Flow 1 1 $ 15,000 2 2 13,000 3 14,000 4 13,600 Project Y (Slow-Motion Replays of Commercials) ($50,000 Investment) Year Cash Flow $ 25,000 2 2 18,000 19,000 21,000 a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index Screenshot Appendix B Present value of $1, PVF PV = FV (1 + i)" Period 1% 2% 3% 5% 8% 9% 11% 12% 10% 0.909 1 0.990 0.926 0.917 0.901 0.893 2 4% 0.962 0.925 0.889 0.980 0.961 0.942 0.980 0.971 0.857 0.952 0.907 0.864 0.842 0.971 0.943 0.915 0.888 0.863 3 0.794 0.772 0.826 0.751 0.683 0.621 0.797 0.712 0.636 0.567 4 0.735 0.708 0.961 0.951 0.942 0.924 0.906 0.855 0.822 0.823 0.784 5 0.681 0.650 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 6 0.888 0.837 0.746 0.630 0.564 0.507 0.790 0.760 0.596 0.547 7 0.933 0.813 0.711 0.583 0.513 8 0.923 0.789 0.731 0.871 0.853 0.837 0.820 0.540 0.500 0.467 0.424 9 0.914 10 0.905 0.463 0.677 0.645 0.614 0.585 0.557 0.386 0.352 0.766 0.744 0.722 0.701 0.681 11 0.502 0.460 0.422 0.388 0.356 0.326 0.804 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.703 0.676 0.650 0.625 0.601 0.577 0.429 0.317 Percent 6% 7% 0.943 0.935 0.890 0.873 0.840 0.816 0.792 0.763 0.747 0.713 0.705 0.666 0.665 0.623 0.627 0.582 0.592 0.544 0.558 0.508 0.527 0.475 0.497 0.444 0.469 0.415 0.442 0.388 0.417 0.362 0.394 0.339 0.371 0.317 0.350 0.296 0.331 0.277 0.312 0.258 0.233 0.184 0.174 0.131 0.097 0.067 0.054 0.034 0.896 0.887 0.879 12 0.286 0.788 0.773 13 0.530 0.397 0.368 0.340 0.350 0.319 0.290 0.263 0.239 0.258 14 0.870 0.661 HERE 0.299 0.232 0.205 0.758 0.743 15 0.861 0.642 0.555 0.315 0.275 0.209 0.183 16 0.853 0.623 17 0.844 0.728 0.714 0.700 0.534 0.513 0.494 18 0.163 0.146 0.130 0.605 0.587 0.570 0.554 0.252 0.231 0.212 0.194 0.178 0.836 0.828 0.820 0.780 19 0.475 0.505 0.481 0.458 0.436 0.416 0.396 0.377 0.295 0.231 0.142 0.087 0.188 0.170 0.153 0.138 0.124 0.292 0.270 0.250 0.232 0.215 0.146 0.099 0.686 0.673 0.218 0.198 0.180 0.164 0.149 0.092 0.057 0.116 20 0.456 0.104 25 0.375 0.074 0.610 0.552 0.478 0.412 0.116 0.075 0.059 0.033 30 0.308 40 0.742 0.672 0.608 0.453 0.372 0.307 0.228 0.208 0.141 0.046 0.021 0.032 0.013 0.022 0.009 0.044 0.015 0.005 0.011 0.003 50 Appendix B (concluded) Present value of $1 Percent Period 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 1 0.877 0.847 0.833 0.741 0.885 0.783 0.862 0.743 0.870 0.756 0.658 0.855 0.731 0.840 0.706 0.800 0.640 0.769 0.592 0.714 0.510 0.667 0.444 2 0.769 0.694 0.549 0.718 0.609 .693 0.675 0.641 0.624 0.593 0.579 0.512 0.455 0.406 0.364 0.296 4 0.613 0.592 0.572 0.552 0.534 0.515 0.499 0.482 0.410 0.350 0.301 0.260 0.198 5 0.519 0.476 0.456 0.223 0.132 0.543 0.480 0.497 0.432 0.419 0.352 0.402 0.335 6 0.186 0.133 0.456 0.410 0.390 0.328 0.262 0.210 0.437 0.370 0.314 0.266 0.269 0.207 0.159 0.088 0.165 0.122 7 0.400 0.354 0.095 0.059 0.425 0.376 0.376 0.327 0.296 0.249 0.279 0.233 8 0.333 0.285 0.243 0.351 0.305 0.168 0.123 .091 .068 0.039 9 0.333 0.263 0.194 0.134 .048 0.026 0.284 0.247 0.308 0.270 0.237 0.225 0.191 0.209 0.176 0.094 0.073 .067 0.050 10 0.295 0.227 0.208 0.162 0.107 0.035 .017 0.012 11 0.261 0.215 0.162 0.148 0.135 0.086 0.056 0.037 0.025 12 0.137 0.195 0.168 0.145 0.069 0.178 0.152 0.130 0.231 0.204 0.027 0.208 0.182 0.008 0.187 0.163 0.124 0.104 0.1 12 0.093 0.043 0.033 0.018 0.013 13 0.116 0.055 0.020 0.005 14 0.160 0.141 0.125 0.111 0.099 0.078 0.044 0.025 0.015 0.009 0.003 15 0.140 0.123 0.020 0.181 0.160 0.141 0.125 0.011 0.108 0.093 .095 0.081 0.088 0.074 0.062 0.084 0.071 0.065 0.054 0.035 .028 0.006 0.005 0.002 0.002 0.123 0.015 16 17 0.107 0.093 0.008 0.006 0.108 .080 0.069 .060 0.052 0.045 .023 0.012 0.003 .001 18 0.111 0.095 0.081 0.069 0.059 .051 .044 .018 0.005 0.001 0.038 0.031 0.009 0.007 0.002 0.002 19 0.098 .083 0.070 0.060 0.043 0.07 .014 0.003 20 .073 0.051 0.037 0.031 0.026 0.012 0.005 0.002 0.001 .087 0.047 0.026 25 0.051 .043 .020 .009 0.061 0.030 0.015 0.024 0.010 0.004 0.001 0.038 0.020 0.001 0.016 0.007 0.013 0.005 30 .012 0.004 0.001 40 .008 0.005 .004 0.003 0.002 0.001 0.001 0.001 50 0.002 0.001 0.001 0.001