Chapter 16 Homework i Samen Help Save & Exlt Submit Check my work 1 ! Part 1 of 3 Required information {The following information applies to the questions displayed below.) Metro Car Washes, Inc. is reviewing an investment proposal. The initial cost as well as the estimate of the book value of the investment at the end of each year, the net after-tax cash flows for each year, and the net income for each year are presented in the following schedule. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life. 2 points Annual Net After-Tax Cash Flows Annual Net Income eBook Year 0 1 2 3 + 4 5 Initial Cost and Book Value $390,000 260,000 156,000 78,000 26,000 $168,000 144,000 120,000 96,000 72,600 $38,000 40,000 42,000 44,000 46,000 Print References Management uses a 10 percent after-tax target rate of return for new investment proposals. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the project's payback period. Assume that the cash flows in years 1 through 5 occur uniformly throughout each year. (Round your answer to 2 decimal places.) Payback period years 2. Calculate the accounting rate of return on the investment proposal. Base your calculation on the initial cost of the investment. (Round your "Percentage" answer to 2 decimal place (i.e., 1234 should be entered as 12.3).) Accounting rate of return % 3. Compute the proposal's net present value. Net present value Future Value and Present Value Tables Table 1 Future Value of $1.00(1 + 1 Period 4% 6% 8% 10% 12% 14% 20% 1.060 1.124 1.191 1.263 4220 1.338 1.100 1.210 1.331 1.464 Hesa 1.611 1 2 3 4 5 6 6 7 8 9 10 1.040 1,082 1.125 1.170 1947 1.217 1.266 1.316 1.369 4.00 1.423 1.480 1.080 1.166 1.260 1.361 4 en 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 4.681 10.063 21.725 1.120 1.254 1.405 1.574 1789 1.762 1.974 2211 2476 2773 27 3.106 3.479 ww 3.896 ine 4.364 4.887 5.474 1.200 1.440 1.728 2.074 400 2.488 2.986 3.583 4.300 5.160 em 6.192 1.419 1.504 1.594 1.690 420 1.791 1.898 2.012 2.133 2.261 2.397 3.207 5.744 10.286 1.140 1.300 1.482 1.689 1.925 4025 2.196 2.502 2.853 3.252 202 3.707 4.226 4.818 5.492 ege 6.261 7.138 11 12 1.772 1.949 2.144 2.359 2.594 2.853 2.000 3.139 3.452 3.798 4.177 6.728 17.450 45.260 1.540 1.601 000 1.666 4799 1.732 1.801 2.191 3.243 4.801 13 14 15 7.430 * 8.916 10.699 12.839 15.407 20 30 40 9.646 29.960 93.051 13.743 50.950 188,880 38.338 237.380 1,469.800 Period 4% 6% 8% 10% 12% 14% 20% 1 Table II Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) (1 + " - 1 r 2 3 4 5 1.000 2.040 3.122 4.247 5.416 6.633 7.898 9.214 10598 10.583 12.006 13.486 15.026 16.627 18.292 20.024 29.778 56.085 96.026 1.000 2.060 3.184 4.375 5.637 6.975 8.394 9.898 11.491 12404 6 7 8 9 10 1.000 2.080 3.246 4.506 5.867 7.336 8.923 10.637 100 12.488 14.487 16.646 10.040 18.977 21.496 24.215 27.152 45.762 113.283 259.057 1.000 2.100 3.310 4.641 em 6.105 B405 7.716 9.487 11.436 13.580 45920 15.938 18.531 21.385 24.523 2020 27.976 47 31.773 57.276 164.496 442.597 1.000 2120 3.374 220 4.779 6.353 252 - 8. 115 10.089 12.300 4422 14.776 17540 17.549 20.665 une 24.133 28.029 2020 32393 37.280 75,052 241.330 767,090 1.000 2.140 3.440 4.921 6.610 B640 8.536 were 10.730 13 233 ses 16.085 19.337 23.045 27271 32089 270 37581 43.842 91.025 356.790 1,342.000 1.000 2.220 3.640 5.368 7.442 - 9.930 12.916 16.499 20.799 25.969 32.150 39.580 48.497 SO4 59.196 72.035 186.190 1,181.900 7,343.900 $*|*** 11 12 13 14 15 20 30 40 14.972 10 16.870 om 18.882 21.015 23.276 36.778 79,058 154.762 Table III Present Value of $1.00 1 (1 + " Period Period 4% 6% 6% 8% 10% 12% 14% 16% 18% 20% % 22% 24% 26% 28% 30% 32% .833 .694 909 .826 .751 .683 .621 1 2 3 3 4 5 6 7 8 9 10 .862 .743 .641 .552 552 .476 410 .410 .354 305 .5/9 .482 402 335 806 .650 524 420 423 341 275 .794 .630 500 -397 315 250 .877 .769 .675 .592 .519 010 .450 400 351 . .308 270 .237 .781 .610 .477 .373 291 231 227 982 .925 .889 .855 .822 .790 .760 .731 .703 .676 .650 .625 .601 577 .555 456 308 208 .504 .513 ARZ 943 890 840 .792 34 .747 . .705 665 .627 592 558 527 497 469 442 417 312 .174 926 857 .794 .735 100 .681 .630 583 540 500 463 429 397 368 340 315 215 099 046 .896 .797 .712 .636 567 507 452 404 361 322 287 257 229 206 .183 .104 .033 .847 .718 .609 .516 437 * .370 314 .266 20 225 .191 .162 .137 .116 .099 084 .037 .007 .001 .758 .574 435 329 250 .189 .143 .108 082 .062 820 .672 551 .451 370 303 249 .204 20 .167 .137 .112 .092 .075 .062 051 ,019 .003 424 .386 .350 .000 319 290 263 .239 .149 .067 .022 .263 .227 .195 100 .168 .145 .125 11 .769 .592 455 350 .200 269 .207 .159 .123 . ,094 ,073 .000 .056 .043 .033 ,025 ,020 .005 .222 .179 .144 .116 .094 .076 .061 049 .219 .233 .194 .162 .135 .112 .093 .078 .065 .026 ,004 .208 12 13 10 14 .180 .157 1 .125 .099 .079 .062 .050 .039 .031 .010 .001 .118 .139 . 108 .085 .066 .052 .040 .032 .025 .007 .001 .182 .160 140 .047 .036 .027 ,021 .016 ,004 15 . 108 040 20 30 40 .073 .020 .006 .051 .012 003 .014 .002 097 011 .001 Table IV Present Value of Series of $1.00 Cash Flows H-x+r) (1 + r) Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30% 1 2 3 0.962 1.886 2.775 3.630 4.452 0.833 1.528 2.106 2.589 2991 4 5 6 7 8 9 10 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 7.887 8.384 8.853 9.295 9.712 11.470 13.765 15.046 5.242 6.002 6.733 7.435 8.111 8.760 ouro 9.385 9.986 10.563 11.118 44 440 13.590 17.292 19.793 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 Face 7.536 7.904 8.244 8.559 9.818 11.258 11.925 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.496 w 6.814 7.103 7.367 7.606 8.514 9.427 9.779 0.896 0.877 1.690 1.647 2.402 2.322 3.037 2.914 3.606 3.433 4.111 3.889 4.564 4.288 4.968 4.639 5.328 4.946 5.650 5.216 5.453 5.938 20 6.194 5.660 6.424 5.842 6.628 6.002 6.811 6.142 7.469 een 6.623 8.056 7.003 8.244 7.105 0.862 1.605 2.246 2.798 3.274 3.685 wo 4.039 4.344 4.607 4.833 5.029 wce 5.197 5.342 E B 5.468 5.575 5.929 6.177 6.234 0.847 1.566 2.174 2.690 3.127 3.498 wam 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5.008 5.092 5.353 5.517 5.548 0.820 1.492 2.042 2.494 2.864 3.167 3.416 3.619 3.786 3.923 4.035 4.127 wa 4.203 or 4.265 4.315 4.460 4.534 4.544 3.326 we 3.605 3.837 4.031 4.192 4.327 4.439 . 4.533 4042 4.611 4.675 4.870 4.979 4.997 0.806 1.457 1.981 2.404 2.745 wa 3,020 3242 3.421 3.566 3.682 3.776 surto 3.851 3.912 3.962 4.001 4.110 4.160 4.166 0.800 1.440 1.962 2362 2689 2951 3.161 3329 3.463 3.571 3.666 3.725 3.780 2 3.824 3.859 3.964 3.995 3.999 0.794 0.781 1.424 1.392 1.923 1.868 2320 2.241 2.635 2.532 2.885 2.759 3.083 2.937 3241 3.078 3.366 3.184 co 3.466 3.289 3.544 3.335 3.606 3.387 3.656 3.427 3.696 3.459 3.726 3.483 3.808 3.546 3.842 3.569 3.846 3.571 11 12 13 14 15 20 20 30 40 0.769 1.361 1.816 2.168 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 2240 3.249 3.268 2246 3.316 3.332 3.333