appendix d

appendix b

A fim, whose cost of capital is 8 percent, may acquire equipment for $127,900 and rent it to someone for a period of six years. a. If the firm charges $29,370 annually to rent the equipment, what are the net present value and the internal rate of return on the investment Use Appendix to answer the questions. Use a minus sign to enter negative values, if any, Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: Should the firm acquire the equipment? The firm Select acquire the equipment as the net present value is act and the internal rate of return Select the firm's cost of capital b. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8 percent on the investment? Use Appendix to answer the question. Round your answer to the nearest dollar c. If the firm can sell the equipment at the end of the fifth year for $14,100 and receive annual rent payments of $29,370, what are the net present value and the internal rate of return on the investment? Use Appendix B and Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number NPV: $ IRR: What is the impact of the residual? The residual value -sales both the NPV and IRR. d. If the $14.10D residual resulted in the firm charging only $27,020 for the rental payments, what is the impact on the investment's net present value? Use Appends to answer the question. Round your answer to the nearest dollar. and And Reducing the rental payments and recouping it through the residual value Select the net present value by $ Interest Factors for the Present Value of an Annuity of One Dollar Period Year 1 2 3 4 5 1% 2% 3% 3% 40 4% 5% 50% 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 0.750 0.75 1.970 1.942 1.913 1.886 1.859 1823 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1566 1.528 1.457 1.392 1.332 1.276 2.941 2884 2.829 2.775 2.723 2.673 2.624 2.577 2521 2 487 2402 2322 2.246 2.174 2.106 1981 1.868 1.766 1.674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 31703037 2.914 2.798 2.690 2589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 7 B 9 10 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2399 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 7.375 7020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.539 4 344 4.078 3.837 3.421 3076 2.786 2540 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 7024 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 11.255 10.575 9.954 9.385 8.863 8.384 7943 7536 12.134 11 348 10.635 9986 9 394 8 534 8.358 7904 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 6.805 6495 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 7103 6.424 5 842 5.342 4910 4533 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 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 15.5F2 14.292 13.166 12.166 11.274 10.477 9.763 9122 8.544 8.002 Z.1206,373 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 9.272 8.756 8.2017.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 17226 15.678 14.324 13. 134 12.085 11.158 10.336 9.604 8950 83657366 6.550 5.877 5.316 4.844 4.097 3539 3.109 2.770 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7469 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 7843 6.873 6.097 5.467 4 948 4.147 3 564 3.122 2.776 0 25.308 22.937 19.600 17.292 15.373 13.765 12 409 1 258 10 274 9.427 8.055 7003 6.177 5517 4979 4.160 3.569 3.124 2.778 Interest Factors for the Present Value of One Dollar Period year) 2 3 4 1% 990 980 971 961 951 2% 980 961 942 924 906 3% 4% 971 962 943925 915 889 889 855 863 822 5% 952 907 864 823 784 6% 942 90 840 292 747 7% 925 873 816 763 713 8% 926 857 794 735 681 9% 917 842 772 708 650 10% 909 826 751 683 621 12% 892 797 712 636 567 14% 15% 16% 18% 877 870862 .47 769 756 743 718 675 658 641 609 502 572 552 516 519 497 476 437 20% 24% 28% 833 806 781 694650 .610 579524 477 482423 373 402 341 291 666 623 630 583 564 513 456 400 942 933 923 914 905 888 871 853 837 820 838 813 789 766 744 790 760 731 703 676 746 711 677 645 614 705 665 627 592 558 596 547 SOZ 460 422 467 507 452 404 361 322 432 376 327 284 247 410 354 305 263 227 370 314 266 226 191 335 279 233 194 162 9 178 .139 .108 .085 544 508 500 463 424 386 308 270 116 896 .887 879 .870 861 804 788 773 758 743 722 701 681 661 642 .650 625 601 577 555 585 527 557 492 530 469 505 442 481417 475 444 415 388 262 429 397 368 340 315 388350 356 319 326 290 299 263 275 239 287 257 229 205 183 237 208 182 .160 140 215 187 163 141 123 195 168 145 125 108 162 137 116 .099 084 135 112 093 078 065 .094 076 061 049 040 .066 052 040 .032 025 15 853 814 836 252 231 17 18 728 719 700 686 673 623 605 587 570 554 534 513 494 475 456 458 436 416 396 377 394 371 350 331 312 339 312 296 276 258 292 270 250 232 215 194 164 20 820 218 163 123 107 093 071 054 032 019 198 146 108 093 080 060 045 026 015 081 069 051 038 021012 083 070 060 043 031 017 009 149 104 073 061 051 037 026 014 .007 092 059 038 030 024 016 010 005 002 057 .033 070015012.007 004 002 001 780 742 610 552 478 412 375 295 308231 233 184 146 174.131.099 116 075 30 A firm has the following investment alternatives. Each costs $15,000 and has the following cash inflows. Cash Inflow 2 3 4 $ 4,900 $4,900 $4,900 $4,900 3,900 5,800 4,700 4,700 4,200 3,900 3,300 Investment is considered to be typical of the firm's investments, Investment's cash flows vary over time but are considered to be less certain Investment C's cash flows diminish over time but because most of the cash flows occur early in the investment's life, they are considered to be more certain. The firm's cost of capital is 9 percent, but the financial manager uses a hurdle rate of 6 percent for less-risky projects and 12 percent for risker projects. Use Appendix Band Appendix to answer the questions. Assume that the investments are not mutually exclusive and there are no budget restrictions . Based on the cost of capital, should any of the investments be made? Use a minus agn to enter negative valur any. Round your answers to the nearest dollar NPV Investment A): $ NPV(Investment B): $ NPV(Investment C): $ should be made b. If the financial manager uses a risk adjusted cost of capital, should any of the investments be made? Use a minussion to enter negative values, if any, Round your answers to the nearest dollar NPV (Investment A): $ NPV (Investment B): 5 NPV (Investment C): 5 should be made. c. Would the answers to a and b be different if the three investments were mutually exclusive? should be made. If the investments were mutually exclusive in part a ct: If the investments were mutually exclusive in part b elet should be made