B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $379,200 with a 10-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 151,680 units of the equipment's product each year. The expected annual income related to this equipment follows. Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income $ 237,000 83,000 37,920 23,700 144,620 92,380 27,714 $ 64,666 If at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Chart Values are Based on: no i= % Select Chart Amount PV Factor Present Value Net present value TABLE B.1 Present Value of 1 p=1/(1 + i Rate Periods 1% 2% 3% 5% 7% 8% 9% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9901 0.9803 0.9706 0.9610 0.9515 0.9420 0.9327 0.9235 0.9143 0.9053 0.8963 0.8874 0.8787 0.8700 0.8613 0.8528 0.8444 0.8360 0.8277 0.8195 0.7798 0.7419 0.7059 0.9804 0.9612 0.9423 0.9238 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.8043 0.7885 0.7730 0.7579 0.7430 0.7284 0.7142 0.7002 0.6864 0.6730 0.6095 0.5521 0.5000 0.4529 0.9709 0.9426 0.9151 0.8885 0.8626 0.8375 08131 0.7894 0.7664 0.7441 0.7224 0.7014 0.6810 0.6611 0.6419 0.6232 0.6050 0.5874 0.5703 0.5537 0.4776 0.4120 0.3554 0.3066 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 0.6496 0.6246 0.6006 05775 0.5553 05339 0.5134 0.4936 0.4746 0.4564 0.3751 0 3083 0.2534 0.2083 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.5847 0.5568 0.5303 0.5051 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.2953 0.2314 0.1813 0.1420 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 0.5268 0.4970 0.4688 0.4423 0.4173 0.3936 0.3714 0.3503 0.3305 0.3118 0.2330 0.1741 0.1301 0.0972 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 0.4751 0.4440 0.4150 0.3878 0.3624 0.3387 0.3166 0.2959 0.2765 0.2584 0.1842 0.1314 0.0937 0.0668 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 0.3152 0.2919 0.2703 0.2502 0.2317 0.2145 0.1460 0.0994 0.0676 0.0460 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.4224 0.3875 0.3555 0.3262 0.2992 0.2745 0.2519 0.2311 0.2120 0.1945 0.1784 0.1160 0.0754 0.0490 0.0318 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1486 0.0923 0.0573 0.0356 0.0221 0.8929 0.8696 0.7972 0.7561 0.7118 0.6575 0.6355 0.5718 0.5674 0.4972 0.5066 0.4323 0.4523 0.3759 0.4039 0.3269 0.3606 0.2843 0.3220 0.2472 0.2875 0.2149 0.2567 0.1869 0.2292 0.1625 0.2046 0.1413 0.1827 0.1229 0.1631 0.1069 0.1456 0.0929 0.1300 0.0808 0.1161 0.0703 0.1037 0.0611 0.0588 0.0304 0.0334 0.0151 0.0189 0.0075 0.0107 0.0037 0.6717 *Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5500 in 6ycan from todas? Using the factor of a = 12 und/-5% (12 semiannual period and a semiannual te of 5), the factor is 0.5568. You would need to invest $2,784 day (55600X0.5568). f= (1 + )* 5% TABLE B.2 Future Value of 1 Rate Porlods 1% 4% 6% 7% 8%. 9% 10% 12% 15% 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1 1.0100 1.0200 1.0300 1.0400 1.0500 10600 1.0700 1.0800 1.0900 1.1000 1.1200 1.1500 2 1.0201 1.0404 1.0609 1.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100 1.2544 1.3225 3 1.0303 1.0612 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 1.5209 4 1.0406 1.0824 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 1.7490 5 1.0510 1. 1041 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 20114 6 1.0615 1.1262 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 2.3131 7 1.0721 1.1487 1.2299 1.3159 1.4071 15036 1.6058 1.7138 1.8280 1.9487 22107 2.6600 8 1.0829 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 3.0590 9 1.0937 1.1951 13048 1.4233 1.5513 1.6895 1.8385 1.9990 21719 2.3579 2.7731 3.5179 10 1.1046 1.2190 1.3439 1.4802 1,6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058 40456 11 1.1157 1.2434 1.3842 1.5395 1.7103 1.8983 2. 1049 2.3316 2.5804 2.8531 3.4785 4.6524 12 1.1268 1.2682 1.4258 1.6010 1.7959 20122 2.2522 25182 2.8127 3.1384 3.8960 5.3503 13 1.1381 1.2936 1.4685 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 3.4523 4.3635 6.1528 14 1.1495 1.3195 1.5126 1.7317 1.9799 22609 2.5785 2.9372 3.3417 3.7975 4.8871 7.0757 15 1.1610 1.3459 1.5580 1.8009 2.0789 23966 2.7590 3.1722 3.6425 4.1772 5.4736 8.1371 16 1.1726 1.3728 1.6047 1.8730 2.1829 25404 29522 3.4259 3.9703 4.5950 6.1304 9.3576 17 1.1843 1.4002 1.6528 1.9479 2.2920 26928 3.1588 3.7000 4.3276 5.0545 6.8660 10.7613 1.1961 1.4282 1.7024 2.0258 2.4066 28543 3.3799 3.9960 4.7171 5.5599 7.6900 12.3755 19 1.2081 1.4568 1.7535 2.1068 25270 3.0256 3.6165 4.3157 5.1417 6.1159 8.6128 14.2318 20 1.2202 1.4859 1.8061 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275 9.6463 16.3665 25 1.2824 1.6406 2.0938 2.6658 3.3864 42919 5.4274 6.8485 8.6231 10.8347 17.0001 32.9190 30 1.3478 1.8114 2.4273 3.2434 4.3219 5.7435 7.6123 10.0627 13.2677 17.4494 29.9599 66.2118 35 1.4166 1.9999 2.8139 3.9461 5.5160 7.6861 10.6766 14.7853 20.4140 28.1024 52.7996 133.1755 40 1.4889 2 2080 3.2620 4.8010 7.0400 10.2857 14.9745 21.7245 31.4094 45.2593 93.0510 267.8635 Used to cetepute the future value of a known present amount. For example: What is the accumulated value of $3.000 invested today 28% compounded quarterly for 5 year? Uning the factors of 2) and i 25 (20 quarterly periods and a quarterly interest rate of 2), the factor is 1.4859. The accumulated value is $4.457.70 53.000 1.4859). p=[-atomi (1 + i)" TABLE B.3: Present Value of an Annuity of 1 Rate Perlods 1% 2% 3% 5% 7% 9% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 12 18 19 20 25 30 35 40 0.9901 1.9704 2.9410 3.9020 4.8534 5.7955 6.7282 7.6517 85660 9.4713 10.3676 11.2551 12.1337 13.0037 13.8651 147179 15.5623 16.3983 17.2260 18.0456 22.0232 25,8077 29.4086 32 8347 0.9804 1.9416 28839 3.8077 4.7135 5.6014 6.4720 7.3255 8.1622 8.9826 9.7868 10.5753 11.3484 12.1062 12.8493 13.5777 14.2919 14.9920 15.6785 16.3514 19.5235 22 3965 24.9986 27.3555 0.9709 1.9135 2.8286 3.7171 45797 5.4172 6.2303 7.0197 7.7861 8.5302 9.2526 9.9540 10.6350 11.2961 11.9379 12.5611 13.1661 13.7535 143238 14.8775 17.4131 19.6004 21.4872 23.1148 0.9615 1.8861 2.7751 3.6299 4.4518 5.2421 6.0021 6.7327 7.4353 8.1109 8.7605 9.3851 9.9856 10.5631 11.1184 11.6523 12.1657 12.6593 13.1339 13.5903 15,6221 17.2920 18.6646 19.7928 0.9524 1.8594 27232 3.5460 4.3295 5.0757 5.7864 6.4632 7.1078 7.7217 8.3064 8.8633 9.3936 9.8986 10.3797 10.8378 11.2741 11.6896 12.0853 12.4622 14.0939 15.3725 16.3742 17.1591 0.9434 1.8334 26730 3.4651 42124 49173 5.5824 6.2098 6.8017 7.3601 7.8869 8.3838 8.8527 9.2950 9.7122 10.1059 10.4773 10.8276 11.1581 11.4699 12.7834 13.7648 14.4982 15.0463 0.9346 1.8080 26243 3.3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 7.4987 7.9427 8.3577 8.7455 9.1079 9.4466 9.7632 10.0591 10.3356 10.5900 11.6536 12.4090 12.9477 13.3317 0.9259 1.7833 2.5771 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 6.7101 7.1390 75361 7.9038 8.2442 8.5595 8.8514 9.1216 9.3719 9.6036 9.8181 10.6748 11.2578 11.6546 11.9246 09174 1.7591 2.5313 3.2397 3.8897 4.4859 5.0330 5.5348 5.9952 6.4177 6.8052 7.1607 7.4869 7.7862 8.0607 8 3126 85436 8.7556 8.9501 9.1285 9.8226 10.2737 10.5668 10.7574 0.9091 1.7355 24869 3.1699 3.7908 4.3553 4.8684 5.3349 5.7590 6.1446 6.4951 68137 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 9.0770 9.4269 9.6442 9.7791 0.8929 1.6901 24018 3.0373 3.6048 4.1114 4.5638 4.9676 5.3282 5.6502 5.9377 6.1944 6.4235 6.6282 6.8109 6.9740 7.1196 7.2497 73658 7.4694 7.8431 8.0552 8.1755 8.2438 0.8696 1.6257 2.2832 2.8550 3.3522 3.7845 4.1604 4.4873 4.7716 5.0188 52337 5.4206 5.5831 5.7245 5.8474 5.9542 6.0472 6.1280 6.1982 6.2593 6.4641 6.5660 6.6166 6.6418 "Used to calculate the present value of a series of equal payments made at the end of each period. For euample: What is the present value of $2,000 per your for 10 years auming an annalitate of ? For 10.1-9), the PV facto 64177.52.000 per year for 10 years in the equivalent of $12.15 today ($2.000 x 6,4177) f=[(1 + ir - 13/1 TABLE B.4 Future Value of an Annuity of 1 Rate Periods 1% 2% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1,0000 1.0000 1.0000 1.0000 1.0000 1.0000 2 20100 2.0200 2.0300 20400 2.0500 2.0600 20700 2.0800 2.0900 2.1000 2.1200 21500 3 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 3.4725 4 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 45731 4.6410 4.7793 4.9934 5 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.7424 6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 8.7537 7 72135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 11,0668 8 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12 2997 13.7268 9 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 11 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 20.6546 24.3493 12 12.6825 13.4121 14.1920 15.0258 15.9171 16 8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 13 13 8093 14.6803 15.6178 16 6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 15 16.0969 17.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 17 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 18 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88 2118 20 22.0190 24.2974 26.8704 29.7781 330660 36.7856 40.9955 45.7620 51.1601 57.2750 720524 102.4436 25 28.2432320303 36.4593 41.6459 47.7271 548645 63.2490 73.1059 84.7009 98.3471 133.3339 2127930 30 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 944608 113.2832 136,3075 164.4940241.3327 4347451 35 41.6603 49.994560.4621 73.6522 90.32031114348 138.2369 172.3168 215.7108 271.0244 431.6635 881.1702 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 1996351 259,0565 337.8824442 5926767.0914 1,779,0903 Uued to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of $4,600 per year for youn amuning = annual interest rate of 8S? For (n= 6, =8%), the FV factor is 7.3359. 84.000 per year for 6 years accumulates to $29.343.60 (54300x73359)