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 4-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. $ 237,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses 83,000 94,800 23,700 201,500 35,500 Pretax income Income taxes (30%) 10,650 Net income 24,850 E If at least an 9% 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: Select Chart PV Factor Amount Present Value Net present value TABLE B.4 f = [(1 + iy" 1]/i Future Value of an Annuity of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 2.1000 3.3100 1.0000 2.1500 1.0000 2.0100 1.0000 1.0000 1.0000 2.0400 1.0000 1.0000 2.0600 3.1836 1.0000 2.0700 1.0000 2.0900 1.0000 2.1200 3.3744 2.0200 2.0300 2.0500 2.0800 3.0909 3.0301 3.0604 3.1216 3.1525 3.2149 3.2464 3.2781 3.4725 4.1836 5.3091 4 4.0604 4.1216 4.2465 4.3101 4.3746 4.4399 5.7507 4.5061 4.5731 4.6410 4.7793 4.9934 5.204 5.6371 6.7424 8.7537 5.4163 5.5256 5.8666 6.3528 5. 5.1010 5.9847 6.1051 6.1520 6.3081 7.4343 8.5830 7.5233 9.2004 11.0285 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.7156 8.1152 8.6540 10.2598 7.2135 7.6625 7.8983 8.1420 8.3938 8.9228 9.4872 10.0890 11.0668 8.2857 9.3685 10.4622 10.9497 12.1687 8.8923 9.5491 9.8975 11.4359 12.2997 13.7268 8. 9.2142 10.6366 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 15.1929 17.5603 20.1407 14.4866 20.3037 10 11.4639 12.0061 12.5779 13.1808 13.8164 15.9374 17.5487 20.6546 11 11.5668 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 18.5312 24.3493 14.1920 21.3843 29.0017 12 12.6825 13.4121 15.0258 15.9171 16.8699 17.8885 18.9771 24.1331 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 16.0969 17.2934 17.0863 18.5989 18.2919 19.5986 21.5786 21.0151 22.5505 24.2149 26.0192 27.9750 31.7725 32.3926 40.5047 15 20.0236 23.2760 25.1290 27.1521 29.3609 37.2797 47.5804 25.6725 30.3243 33.0034 42.7533 55.7175 17.2579 18.6393 20.1569 21.8245 23.6575 27.8881 35.9497 16 18.4304 20.0121 19.6147 21.4123 28.2129 30.9057 33.7600 36.7856 21.7616 23.6975 25.8404 17 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 23.4144 25.1169 26.8704 36.4593 55.7497 63.4397 72.0524 33.9990 37.3790 40.9955 63.2490 94.4608 18 25.6454 28.1324 37.4502 41.3013 45.5992 75.8364 27.6712 29.7781 41.6459 56.0849 73.6522 41.4463 45.7620 73.1059 46.0185 51.1591 51.1601 57.2750 84.7009 98.3471 136.3075 164.4940 88.2118 102.4436 30,5390 33.0660 47.7271 19 20.8109 22.8406 20 22.0190 24.2974 54.8645 79.0582 28.2432 32.0303 133.3339 212.7930 25 34.7849 40.5681 49.9945 60.4020 47.5754 60.4621 30 66.4388 113.2832 241.3327 434.7451 172.3168 35 41.6603 90.3203 111.4348 138.2369 215.7108 271.0244 431.6635 881.1702 48.8864 95.0255 120.7998 154.7620 442,5926 40 75.4013 199.6351 259.0565 337.8824 767.0914 1,779.0903 Used to calculate the future value of a series of equal pay ments made at the end of each period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%? For (n = 6, i = 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 x7.3359). -|--ai" TABLE B.3: (1+ iya li Present Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9709 0.8696 0.9901 0.9804 0.9615 0.9524 0.9434 1.8334 2.6730 0.9346 0.9259 0.9174 0.9091 0.8929 1.9704 2.9410 1.9416 1.9135 1.8861 1.8594 1.8080 1.7833 1.7591 1.7355 1.6901 1.6257 2.8839 2.8286 2.7751 2.7232 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.3872 4 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3121 3.2397 3.1699 3.0373 2.8550 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 3.3522 4.4859 5.6014 4.9173 4.1114 4.5638 4.9676 5.3282 5.6502 5.9377 6.1944 6.4235 6. 5.7955 5.4172 5.2421 5.0757 4.7665 4.6229 4.3553 3.7845 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.1604 4.4873 7.6517 8.5660 9.4713 10.3676 11.2551 5.5348 7.3255 7.0197 6.7327 6.4632 6.2098 6.8017 7.3601 7.8869 5.9713 5.7466 5.3349 7.7861 6.2469 6.7101 7.1390 7.5361 7.9038 8.2442 8.1622 8.9826 9.7868 10.5753 11.3484 12.1062 7.4353 7.1078 6.5152 5.9952 5.7590 4.7716 8.5302 9.2526 9.9540 7.0236 7.4987 7.9427 6.4177 6.8052 6.1446 6.4951 5.0188 5.2337 5.4206 7.7217 8.3064 8.8633 10 8.1109 8.7605 11 12 9.3851 8.3838 7.1607 6.8137 7.1034 7.3667 13 12.1337 10.6350 9.9856 9.3936 8.8527 8.3577 8.7455 7.4869 5.5831 5.7245 5.8474 5.9542 14 13.0037 11.2961 10.5631 9.8986 9.2950 7.7862 6.6282 10.3797 10.8378 12.8493 13.5777 15 13.8651 11.9379 11.1184 9.7122 10.1059 10.4773 9.1079 9.4466 9.7632 10.0591 8.5595 8.8514 9.1216 9.3719 9.6036 8.0607 8.3126 7.6061 6.8109 14.7179 7.8237 16 12.5611 11.6523 6.9740 17 15.5623 14.2919 13.1661 13.7535 14.3238 14.8775 12.1657 11.2741 8.5436 8.0216 7.1196 6.0472 11.6896 6.1280 18 16.3983 14.9920 12.6593 10.8276 8.7556 8.2014 7.2497 8.3649 8.5136 9.0770 17.2260 18.0456 15.6785 16.3514 19.5235 11.1581 6.1982 19 13.1339 12.0853 10.3356 8.9501 7.3658 20 13.5903 15.6221 12.4622 14.0939 11.4699 12.7834 10.5940 11.6536 12.4090 12.9477 9.8181 9.1285 9.8226 7.4694 6.2593 10.6748 7.8431 8.0552 25 22.0232 17.4131 6.4641 15.3725 16.3742 17.1591 6.5660 30 25.8077 22.3965 19.6004 17.2920 13.7648 11.2578 10.2737 9.4269 11.6546 9.6442 35 29.4086 24.9986 21.4872 18.6646 14.4982 10.5668 8.1755 6.6166 27.3555 23.1148 15.0463 11.9246 10.7574 6.6418 40 32.8347 19.7928 13.3317 9.7791 8.2438 *Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%? For (n = 10, i = 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177). TABLE B.2 f = (1+ iy" Future Value of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 10% 12% 15% 1.0000 1.0000 1.0200 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.1000 1.0000 1.0000 1.0100 1.0300 1.0400 1.0500 1.0600 1.0700 1.0800 1.0900 1.1200 1.1500 1.1449 1.2250 1.3108 1.0609 1.0816 1.1249 1.2544 1.4049 1.5735 1.0201 1.0404 1.1025 1.1576 1.1236 1.1664 1.1881 1.2100 1.3225 1.1910 1.2625 1.3382 1.2597 1.3605 1.2950 1.4116 1.5209 1.7490 2.0114 1.0303 1.0612 1.0927 1.3310 1.4641 1.6105 1.7716 1.0406 1.0824 4 1.1255 1.1699 1.2167 1.2653 1.3159 1.2155 1.0510 1.1041 1.1593 1.2763 1.4026 1.4693 1.5386 1.7623 1.9738 2.2107 1.1262 1.1487 1.1941 1.2299 1.5007 1.6058 1.0615 1.3401 1.4185 1.5869 1.6771 2.3131 1.4071 1.5036 1.9487 2.1436 1.0721 1.7138 1.8509 1.8280 2.6600 1.0829 1.1717 1.2668 1.3686 1.4775 1.5513 1.5938 1.7182 1.9926 2.4760 2.7731 3.0590 3.5179 4.0456 4.6524 1.4233 1.0937 1.1951 1.3048 1.6895 1.8385 1.9990 2.1719 2.3579 1.9672 1.3439 10 1.1046 1.2190 1.4802 1.6289 1.7908 2.1589 2.3674 2.5937 3.1058 1.3842 1.4258 2.1049 2.2522 11 1.1157 1.2434 1.5395 1.7103 1.8983 2.0122 2.1329 2.3316 2.5804 2.8531 3.4785 1.2682 1.2936 1.6010 1.7959 1.8856 2.5182 2.8127 3.1384 5.3503 6.1528 12 1.1268 3.8960 4.3635 13 1.1381 1.4685 1.6651 2.4098 2.7196 3.0658 3.4523 1.5126 2.5785 2.7590 2.9522 3.7975 14 1.1495 1.3195 1.7317 1.9799 2.2609 2.9372 3.3417 4.8871 7.0757 15 1.1610 1.3459 1.5580 1.8009 2.0789 2.3966 3.1722 3.6425 4.1772 5.4736 8.1371 9.3576 16 1.1726 1.3728 1.6047 1.8730 2.1829 2.5404 3.4259 3.9703 4.5950 6.1304 17 1.1843 1.4002 1.6528 1.9479 2.2920 2.6928 3.1588 3.7000 4.3276 5.0545 6.8660 10.7613 18 1.1961 1.4282 1.7024 2.0258 2.4066 2.8543 3.3799 3.9960 4.7171 5.5599 7.6900 12.3755 4.3157 8.6128 14.2318 16.3665 32,9190 19 1.2081 1.4568 1.7535 1.8061 2.0938 2.4273 2.1068 2.5270 3.0256 3.6165 5.1417 6.1159 1.4859 1.6406 20 1.2202 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275 9.6463 17.0001 25 1.2824 2.6658 3.3864 4.2919 5.4274 6.8485 8.6231 10.8347 30 1.3478 1.8114 3.2434 4.3219 5.7435 7.6123 10.0627 13.2677 17.4494 29.9599 66.2118 1.9999 2.2080 20.4140 28.1024 133.1755 35 1.4166 2.8139 3.9461 5.5160 7.6861 10.6766 14.7853 52.7996 14.9745 40 1.4889 3.2620 4.8010 7.0400 10.2857 21.7245 31.4094 45.2593 93.0510 267.8635 "Used to compute the future value of a known present amount. For ex ample: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n= 20 and i = 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 ($3,000 x 1.4859). TABLE B.1* p = 1/(1 + iy" Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 10% 12% 15% 0.9901 0.9709 0.9174 0.9091 0.8929 0.9804 0.9615 0.9524 0.9070 0.9434 0.8900 0.9346 0.9259 0.8696 0.9803 0.9612 0.9426 0.9246 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 0.7629 0.7084 4 0.9610 0.9238 0.8885 0.8626 0.8548 0.8227 0.7921 0.7350 0.6830 0.6355 0.5718 0.5674 0.9515 0.9057 0.8219 0.7903 0.7835 0.7473 0.7130 0.6806 0.6302 0.6499 0.6209 0.4972 0.9420 0.7462 0.8880 0.8375 0.7050 0.6663 0.5963 0.5645 0.5066 0.4323 0.9327 0.9235 0.8706 0.8535 0.5132 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.4523 0.3759 0.7307 0.6274 0.4039 0.7894 0.6768 0.5820 0.5403 0.5019 0.4604 0.4224 0.3875 0.3555 0.3262 0.2992 0.4665 0.3269 0.5002 0.4241 0.2843 9. 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.3606 0.8203 0.8043 0.7885 0.7730 0.7579 0.5584 0.5268 0.4970 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.3220 0.2875 0.2567 0.4632 0.4289 0.3971 10 0.9053 0.7441 0.6756 0.6139 0.5083 0.2472 0.6496 0.6246 0.6006 0.5847 0.5568 0.5303 0.5051 0.4810 9 0.4751 0.4440 0.4150 0.8963 0.7224 0.2149 11 12 0.8874 0.7014 0.1869 0.1625 0.1413 13 0.8787 0.6810 0.4688 0.3677 0.2292 0.8700 0.5775 0.5553 0.5339 0.5134 0.4423 0.3878 0.3624 0.3387 0.3405 0.3152 0.2919 0.2703 0.2502 14 0.6611 0.2046 0.1827 15 0.8613 0.8528 0.7430 0.6419 0.4173 0.2745 0.1229 0.7284 0.7142 0.7002 0,2519 0.1069 0.4581 16 0.6232 0.3936 0.2519 0.2176 0.1631 0.4363 0.4155 0.1456 0.1300 0.6050 0.5874 17 0.8444 0.3714 0.3166 0.2959 0.2765 0.2311 0.1978 0.1799 0.0929 0.0808 0.0703 18 0.8360 0.4936 0.3503 0.3305 0.2120 0.3957 0.3769 0.8277 19 0.6864 0.5703 0.4746 0.2317 0.1945 0.1784 0.1160 0.1635 0.1161 0.2145 0.1460 0.0994 0.6730 0.5537 0.4776 0.1037 20 0.8195 0.4564 0.3118 0.2584 0.1486 0.0611 0.2953 0.0588 0.0334 0.0189 25 0.7798 0.7419 0.6095 0.5521 0.3751 0.3083 0.2330 0.1842 0.0923 0.0304 30 0.4120 0.2314 0.1741 0.1314 0.0754 0.0490 0.0318 0.0573 0.0151 0.1813 35 0.7059 0.5000 0.3554 0.2534 0.1301 0.0937 0.0676 0.0356 0.0075 0.6717 0.2083 0.0972 0.0668 0.0460 40 0.4529 0.3066 0.1420 0.0221 0.0107 0.0037 *Used to compute the present value of a known future armount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n= 12 and i = 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5,000 x 0.5568)