Big Box Stores is considering an investment proposal. The initial cost of the investment, the net cash flows for each year, and the net income for each year are presented below. There is no salvage value at the end of the investment's life. Year Initial Cost $250,000 Annual Cash Flow Annual Net Income 1 $68,000 $18,000 2 75,000 25,000 3 70,000 20,000 4 65,000 15,000 57,000 7,000 Big Box Stores uses a 10% target rate of return for new investment proposals. Answer the questions in the text box below and Show your work. Note: the Present Value Tables are provided below this question (scroll down). 1) What is the cash payback period for this proposal? (2 pts) 2) What is the average annual net income for this investment? (1 pt) 3) What is the annual rate of return for this investment? (2 pts) 4) What is the net present value of this investment? (4 pts) Year Amount Factor Present Value Total 5) What is your recommendation to Bandon Company regarding this investment? (1pt) Present Value Tables - use as needed, not graded. TABLE 3 Present Value of 1 (71) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 .96154 .95238 .94340 .93458 92593 91743 90909 90090 .89286 86957 2 92456 .90703 .89000 87344 .85734 84168 .82645 .81162 .79719 .75614 3 88900 86384 .83962 .81630 79383 .77218 .75132 .73119 .71178 .65752 4 85480 82270 .79209 .76290 73503 .70843 .68301 .65873 .63552 57175 82193 78353 74726 71299 68058 64993 .62092 59345 56743 49718 6 .79031 74622 .70496 66634 63017 59627 .56447 .53464 50663 43233 7 .75992 .71068 66506 62275 58349 54703 51316 48166 45235 37594 8 73069 67684 .62741 .58201 54027 50187 46651 43393 40388 32690 9 .70259 64461 .59190 54393 50025 46043 42410 39092 36061 28426 10 .67556. .61391 55839 50835 46319 42241 38554 35218 .32197 24719 11 64958 58468 52679 47509 42888 38753 35049 31728 28748 21494 12 .62460 55684 49697 44401 39711 35554 31863 28584 25668 18691 13 60057 53032 46884 41496 36770 32618 28966 25751 .22917 16253 14 57748 50507 44230 38782 34046 29925 26333 23199 20462 14133 15 .55526 48102 41727 36245 31524 27454 23939 20900 .18270 12289 16 53391 45811 39365 33873 29189 25187 21763 18829 .16312 10687 17 51337 43630 37136 31657 27027 23107 19785 16963 .14564 09293 18 49363 41552 35034 29586 25025 21199 .17986 .15282 13004 08081 19 47464 39573 .33051 27615 23171 .19449 .16351 .13768 .11611 07027 20 45639 .37689 31180 25842 21455 .17843 .14864 12403 .10367 .06110 TABLE 4 Present Value of an Annuity of (11) Payments 4% 5% 6% 7% .96154 95238 94340 2 1.88609 1.85941 3 4 6 7 8 6.00205 6.73274 10 11 8.76048 8.30641 12 9.38507 8.86325 13 14 15 16 17 18 19 20 1.83339 2.77509 2.72325 2.67301 3.62990 3.54595 3.46511 4.45182 4.32948 4.21236 5.24214 5.07569 4.91732 5.78637 5.58238 6.46321 6.20979 7.43533 7.10782 6.80169 8.11090 7.72173 7.36009 7.88687 8.38384 9.98565 9.39357 8.85268 10.56312 9.89864 9.29498 11.11839 10.37966 9.71225 11.65230 10.83777 10.10590 12.16567 11.27407 10.47726 12.65930 11.68959 10.82760 13.13394 12.08532 11.15812 13.59033 12.46221 11.46992 8% 906 .93458 92593 191743 90909 1.80802 1.78326 1.75911 1.73554 10% 11% 12% 15% 90090 .89286 86957 1.69005 1.62571 1.71252 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 8.35765 7.90378 7.4869C 7.10336 6.74987 6.42355 5.58315 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 9.44665 8.85127 8.31256 7.82371 7.37916 6.97399 5.95424 9.76322 9.12164 8.54362 8.02155 7.54879 7.11963 6.04716 10.05909 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 10.33560 9.60360 8.95012 8.36492 7.83929, 7.36578 6.19823 10:59401 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933