B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $382,400 and has a 6-year life and no salvage value. B2B Company requires at least an 10% return on this investment. The expected annual income for each year from this equipment follows: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) $ 239,000 Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Equipment Selling, general, and administrative expenses Income 84,000 63,733 23,900 $ 67,367 (a) Compute the net present value of this investment. (b) Should the investment be accepted or rejected on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals and other final answers to the nearest whole dollar.) Chart Values are Based on: n = i = % Select Chart Amount PV Factor Present Value = Net present value Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $318,000 and would yield the following annual net cash flows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net cash flows Year 1 Year 2 2 Year 3 Totals Project ci $ 42,000 138,000 198,000 $ 378,000 Project C2 $ 126,000 126,000 126,000 $ 378,000 a. The company requires a 8% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. b. Using the answer from part a, is the internal rate of return higher or lower than 8% for (i) Project C1 and (ii) Project C2? Complete this question by entering your answers in the tabs below. Required A Required B The company requires a 8% return from its investments. Compute net present values using factors from Table B.1 in Appendix B to determine which projects, if any, should be accepted. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project C1 Initial Investment Chart Values are Based on: % Cash Inflow PV Factor Present Value Year 1 Year 1 Year 2 Year 3 = Project C2 Initial Investment Year Cash Inflow X PV Factor E Present Value Year 1 Year 2 Year 3 = Table B.1* Present Value of 1 p=1/(1 + i)" Ratc Periods 2% 4% 5% 7% 8% 9% Periods 3% 0.9709 6% 0.9434 10% 0.9091 1 1 15% 0.8696 0.9804 0.9615 0.9346 0.9259 0.9174 12% 0.8929 0.7972 1% 0.9901 0.9803 0.9706 1 2 0.9612 0.9426 0.9246 0.8900 0.8734 0.8264 2 0.9524 0.9070 0.8638 0.8227 3 3 0.9151 0.8163 0.9423 0.9238 0.7118 0.8573 0.7938 0.7350 0.8890 0.8548 3 0.8417 0.7722 0.7084 0.8396 0.7921 4 0.9610 0.8885 0.7629 0.6355 0.7561 0.6575 0.5718 0.4972 0.4323 0.7513 0.6830 0.6209 0.5645 4 5 0.9515 0.8626 0.8219 0.7835 0.7473 0.7130 0.6499 5 6 0.9420 0.9057 0.8880 0.8706 0.8375 0.7903 0.5963 0.7462 0.7107 0.6806 0.6302 0.5835 6 0.6663 0,6227 0.5674 0.5066 0,4523 7 0.7050 0.6651 0.6274 0.9327 0.8131 0.7599 0.5470 0.5132 0.3759 7 8 0.9235 0.8535 0.7894 0.6768 0.5820 0.5403 0.5019 0.4039 8 9 0.9143 0.8368 0.5919 0.4604 0.3606 0.7664 0.7441 9 0.4665 0.4241 0.3855 10 0.9053 0.7307 0.7026 0.6756 0.6496 0.6246 0.6446 0.6139 0.5847 0.8203 0.8043 0.5439 0.5083 0.4751 0.4224 0.5584 0.5268 10 0.5002 0.4632 0.4289 0.3971 0.3269 0.2843 0.2472 0.2149 0.1869 0.3220 0.2875 11 0.8963 0.7224 0.3875 11 0.7885 0.7014 0.5568 0.4970 0.4440 0.3555 0.2567 12 12 13 0.8874 0.8787 0.4150 0.3677 13 0.7730 0.7579 0.7430 14 0.6810 0.6611 0.6419 0.4688 0.4423 0.3505 0.3186 0.2897 0.2633 0.2394 0.5303 0.5051 0.4810 0.8700 0.8613 0.3878 0.3262 0.2992 0.2745 0.3405 0.3152 0.2292 0.2046 0.1827 14 0.1625 0.1413 0.1229 15 0.3624 15 0.4173 0.3936 16 0.8528 0.6232 0.6006 0.5775 0.5553 0.5339 0.5134 0.4936 0.4746 0.3387 0.2919 0.2519 0.2176 16 17 0.6050 0.8444 0.8360 17 ele 0.3166 0.2959 0.1631 0.1456 0.1300 0.1069 0.0929 0.0808 18 0.7284 0.7142 0.7002 0.6864 0.6730 0.6095 0.3714 0.3503 0.3305 0.2703 0.2502 0.2317 0.5874 0.5703 18 0.4581 0.4363 0.4155 0.3957 0.3769 0.2953 0.2314 0.2311 0.2120 0.1945 0.1784 0.1978 0.1799 0.1635 0.1486 19 0.0703 19 0.8277 0.8195 0.7798 0.2765 0.2584 0.5537 0.4564 0.2145 20 25 20 0.3118 0.2330 0.1161 0.1037 0.0588 0.0334 0.4776 0.1842 0.1160 25 30 0.0923 0.0573 0.5521 0.4120 0.3751 0.3083 0.2534 0.1741 0.1314 0.1460 0.0994 0.0676 0.7419 0.7059 0.0754 0.0611 0.0304 0.0151 0.0075 0.0037 30 35 0.5000 0.3554 0.1813 0.1301 0.0937 0.0490 0.0356 0.0189 35 40 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 40 *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 $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 0.5568). Table B.2 Future Value of 1 f= (1 + i)" Rate Periods 1% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 2% 1.0000 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0 1.0000 1.0800 1 1.0100 1.0200 1.0300 1.0400 1.0600 1.0700 1.0900 1.1000 1.1200 1 1.1500 1.3225 2 1.0404 1.0816 1.1236 1.1449 1.1881 2 3 1.0201 1.0303 1.0406 1.0612 1.1910 1.2250 1.1664 1.2597 1.3605 1.2950 1.5209 1.0609 1.0927 1.1255 1.1593 3 4 1.0824 1.2625 1.3108 1.4116 1.7490 4 S 1.0510 1.1041 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 1.3382 1.4026 1.4693 2.0114 1.2544 1.4049 1.5735 1.7623 1.9738 2.2107 2.4760 S 6 1.0615 1.1262 1.5007 1.5869 2.3131 1.1249 1.1699 1.2167 1.2653 1.3159 1.3686 1.4233 1.4802 6 7 1.0721 1.1941 1.2299 1.2668 1.1487 1.4185 1.5036 1.5938 7 1.6058 1.7182 1.7138 1.8509 8 1.0829 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 2.1436 2.3579 2.5937 2.8531 3.1384 3.4523 3.7975 8 1.5386 1.6771 1.8280 1.9926 2.1719 2.3674 2.5804 2.8127 2.6600 3.0590 3.5179 4.0456 9 1.6895 1.1717 1.1951 1.2190 1.2434 1.8385 9 1.0937 1.1046 1.1157 10 1.9672 10 11 1.3048 1.3439 1.3842 1.4258 1.4685 1.5126 1.6289 1.7103 1.7959 2.7731 3.1058 3.4785 3.8960 11 1.7908 1.8983 2.0122 2.1329 1.9990 2.1589 2.3316 2.5182 2.7196 4.6524 5.3503 12 2.1049 2.2522 2.4098 1.1268 1.5395 1.6010 1.6651 1.7317 12 13 1.8856 3,0658 4.3635 6.1528 13 1.1381 1.1495 1.2682 1.2936 1.3195 1.3459 1.3728 14 1.9799 2.2609 2.5785 3.3417 4.8871 7,0757 14 15 1.1610 1.5580 2.0789 2.3966 2.7590 2.9372 3.1722 3.4259 3.6425 4.1772 5.4736 8.1371 1.8009 1.8730 15 16 2.1829 2.5404 2.9522 3.9703 4.5950 6.1304 9.3576 16 17 1.1726 1.1843 1.1961 1.4002 1.6047 1.6528 1.7024 2.2920 2.6928 3.1588 4.3276 5.0545 6.8660 10.7613 17 1.9479 2.0258 3.7000 3.9960 18 1.4282 2.4066 3.3799 4.7171 5.5599 7.6900 18 19 1.2081 1.4568 1.7535 2.1068 2.5270 3.6165 4.3157 5.1417 6.1159 19 8.6128 9.6463 20 1.2202 1.4859 1.8061 2.1911 2.8543 3.0256 3.2071 4.2919 5.7435 2.6533 3.8697 4.6610 5.6044 6.7275 12.3755 14.2318 16.3665 32.9190 66.2118 20 25 1.6406 2.0938 5.4274 6.8485 10.8347 25 1.2824 1.3478 3.3864 4.3219 8.6231 13.2677 30 1.8114 2.4273 7.6123 17.4494 2.6658 3.2434 3.9461 4.8010 30 17.0001 29.9599 52.7996 10.0627 14.7853 35 1.4166 1.9999 2.8139 5.5160 7.6861 10.6766 20.4140 28.1024 35 133.1755 267.8635 40 1.4889 2.2080 3.2620 7.0400 10.2857 14.9745 21.7245 31.4094 45.2593 93.0510 40 *Used to compute the future value of a known present amount. For example: 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.3 Present Value of an Annuity of 1 p= [1 - 1/(1+i)"]/i Rate 7% Periods 1% 2% 5% 6% 8% 9% 10% 12% 15% Periods 4% % 0.9615 1 1 0.9901 0.9804 0.9524 0.9346 0.9174 + 0.9091 0.8929 0.8696 0.9434 1.8334 Jan 1 0.9259 1.7833 2 1.8080 2 1.8861 2.7751 3% 0.9709 1.9135 2.8286 3.7171 4.5797 1.8594 2.7232 3 3 1.9416 2.8839 3.8077 4.7135 5.6014 1.9704 2.9410 3.9020 4.8534 5.7955 6.7282 1.7591 2.5313 3.2397 3.8897 3.6299 1.7355 2.4869 3.1699 3.7908 2.5771 3.3121 3.9927 4 5 1.6901 2.4018 3.0373 3,6048 4 1.6257 2.2832 2.8550 3.3522 2.6243 3.3872 4.1002 4.7665 5.3893 3.5460 4.3295 4.4518 | 2.6730 3.4651 4.2124 4.9173 5.5824 6.2098 5 6 4.6229 4.4859 4.3553 3.7845 6 6 5.4172 6.2303 5.2421 6.0021 6.7327 5.0757 5.7864 7 5.0330 4.8684 4.1604 7 5.2064 5.7466 8 7.6517 7.0197 6.4632 5.9713 5.3349 4.1114 4.5638 4.9676 5.3282 5.6502 4.4873 5.5348 5.9952 8 9 8.5660 7.4353 6.2469 5.7590 9 7.7861 8.5302 7.1078 7.7217 6.8017 7.3601 6.5152 7.0236 4.7716 5.0188 10 6.7101 6.4177 6.1446 10 6.4720 7.3255 8.1622 8.9826 9.7868 10.5753 11.3484 12.1062 11 9.2526 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 5.9377 5.2337 11 8.1109 8.7605 9.3851 9.9856 12 9.9540 8.8633 7.1607 9.4713 10.3676 11.2551 12.1337 13.0037 13.8651 5.4206 12 8.3838 8.8527 7.5361 7.9038 6.8137 7.1034 13 7.9427 8.3577 8.7455 10.6350 9.3936 7.4869 6.1944 6.4235 6.6282 5.5831 13 14 11.2961 9.8986 9.2950 8.2442 7.7862 7.3667 5.7245 14 15 10.3797 9.7122 9.1079 7.6061 6.8109 5.8474 15 10.5631 11.1184 11.6523 12.1657 8.0607 8.3126 16 9.4466 11.9379 12.5611 13.1661 13.7535 8.5595 8.8514 9.1216 5.9542 16 10.8378 11.2741 7.8237 8.0216 6.9740 7.1196 17 9.7632 8.5436 6.0472 17 18 11.6896 9.3719 8.7556 6.1280 18 12.6593 13.1339 10.0591 10.3356 7.2497 7.3658 19 9.6036 6.1982 19 12.8493 13.5777 14.2919 14.9920 15.6785 16.3514 19.5235 22.3965 24.9986 27.3555 14.7179 15.5623 16.3983 17.2260 18.0456 22.0232 25.8077 29.4086 32,8347 14.3238 14.8775 17.4131 12.0853 12.4622 10.1059 10.4773 10.8276 11.1581 11.4699 12.7834 13.7648 14.4982 20 8.2014 8.3649 8.5136 9.0770 13.5903 10.5940 9.8181 6.2593 20 8.9501 9.1285 9.8226 10.2737 7.4694 7.8431 25 10.6748 25 15.6221 17.2920 18.6646 11.6536 12.4090 30 14.0939 15.3725 16.3742 6.4641 6.5660 19.6004 21.4872 8.0552 30 35 11.2578 11.6546 11.9246 10.5668 9.4269 9.6442 9.7791 12.9477 13.3317 6.6166 35 8.1755 8.2438 40 23.1148 19.7928 17.1591 15.0463 10.7574 6.6418 40 #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 = 10,1 = 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.4 Future Value of an Annuity of 1 f=[(1 + i)" - 1]/i Rate Periods 1% 2% 4% Periods 1 1.0000 3% 1.0000 2.0300 1.0000 1.0000 2.0200 1 2 2.0100 2.0400 2 3 3,0301 3.0909 3.1216 3 3.0604 4.1216 4 4.0604 4.1836 4.2465 4 5 5.1010 5.2040 5.4163 5 5.3091 6.4684 6 6.1520 6.3081 6.6330 6 7 7.2135 7.4343 7.6625 7.8983 7 8 8.2857 8.5830 8.8923 8 9.2142 10.5828 9 9.3685 9.7546 10.1591 9 10 10.4622 11,4639 12.0061 10 10.9497 12.1687 11 11.5668 12.8078 13.4864 11 12 13.4121 14.1920 12 5% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 2.1500 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 3.4725 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 4.9934 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.7424 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 8.7537 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 11.0668 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 13.7268 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 20.6546 24.3493 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 19.5986 21.0151 22.550S 24.2149 26.0192 27.9750 32.3926 40.5047 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940241.3327 434.7451 90.3203 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635 881.1702 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 13 14.6803 15.6178 13 12.6825 13.8093 14.9474 16.0969 17.2579 15.0258 16.6268 18.2919 20.0236 14 17.0863 14 15 15.9739 17.2934 18.6393 18.5989 15 16 20.1569 21.8245 16 17 18.4304 21.7616 17 18 19.6147 23.4144 20.0121 21.4123 22.8406 24.2974 23.6975 25,6454 27.6712 29.7781 18 19 19 20.8109 25.1169 20 22.0190 26.8704 20 25 28.2432 36.4593 41.6459 25 30 34.7849 32.0303 40.5681 49.9945 47.5754 30 56.0849 73,6522 35 41.6603 60.4621 35 40 48.8864 60.4020 75.4013 95.0255 40 Used 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 $4,000 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 x 7.3359)