City Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special purpose eye-testing machine at a cost of $110,000. No terminal disposal value is expected. City Hospital's required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. City Hospital uses straight-line depreciation. The income tax rate is 30% for all transactions that affect income taxes. (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) Read the requirements. Requirement 1. Calculate the following for the special purpose eye-testing machine: a. Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value is $ b. Payback period (Round your answer to two decimal places.) The payback period is years. Requirement 2. How would your computations in requirement 1 be affected if the special purpose machine had a $10,000 terminal disposal value at the end of 10 years? Assume depreciation deductions are based on the $110,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations NPV would Payback would because the disposal value because the disposal value 0 Requirements 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value b. Payback period c. Internal rate of return d. Accrual accounting rate of return based on net initial investment e. Accrual accounting rate of return based on average investment 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $10,000 terminal disposal value at the end of 10 years? Assume depreciation deductions are based on the $110,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations. Compound Amount of $1.00 (The Future Value of $1.00) S = P1 + it. In this table P = $1.00 10% 1320 2.000 2197 2209 2744 1.589 2002 5378 2153 8.916 Periode 2% % % % 10% 10% 1 1020 1040 1050 1.000 1.100 1.120 2 1.040 10821.124 1166 1.210 1.754 3 1.061 1.125 1.191 1.760 1331 1405 4 1.2 1.170 1.762 1.360 1454 1.574 5 1.104 1.217 12 1469 1511 1.762 6 1.125 1.255 1.419 1587 1.772 1974 7 1.149 1316 1.504 1.714 19 2.211 8 1.172 1.369 1.594 1.851 2144 2.476 9 1.195 1.4231.589 1.999 2358 2773 10 1.219 1480 1.791 2159 2.594 3.106 11 1243 1.599 1.898 232 2853 3479 12 1.268 1.601 2012 2518 3.138 3.896 13 1.294 1.665 2.133 2720 3.452 4.363 14 1319 1.732 2.261 2.937 3.797 4.887 15 1.346 1.801 2.397 3.172 4.177 5474 16 1.373 1.873 2.540 3.426 4.595 6.130 17 1.400 1.948 2693 3.700 5.054 6.866 18 1428 2026 2854 3.996 5.560 2.00 19 1.457 2107 1025 4316 115 8513 20 1486 2.191 3.207 4561 6.727 9.546 21 1.516 2.279 3.400 5.034 7400 10.804 22 1546 2370 3.604 5. 0 8 .140 12.100 23 1577 2.465 3.820 5.871 8.954 13.552 24 1.608 2563 4.049 6.341 9.850 15.179 > 164120642 6.348 10.835 17.000 26 1673 27 45197396 11918 19.040 27 1.707 20034622788 13.110 21.325 211741 2.999 .112 R27 14.421 21 18. RS 3.252 3.707 4.226 5.117 4818 5.836 5.492 6.886 6261 7.988 7.138 9.266 8.137 10.748 9276 12 468 1057514.463 12.056 137 19.461 15.668 22574 17.861 25.185 20.302 30376 23.21235 236 28.462 0874 3016747414 34.390 .000 24.2014 1 2.713 4007 5.790 3.583 5062 5.529 5275 10.541 4.300 5.590 6.358 7.206 8.157 9217 14.758 8 5.160 5.987 6.901 8.005 9.273 10.604 12.166 20.6619 6.192 7.305 8.594 10.086 11.806 13.786 16.060 28.925 10 6.176 7.430 8.912 10.657 12.708 15.112 17.922 21.199 40496 11 7.288 10.872 13.215 16.012 19.343 23.298 71. 93 56.6912 8.599 10.699 12.254 16.26 20.175 24.759 30.299 25907 29371 13 10.147 12.839 16.182 20.319 25.421 31.691 39.374 48.757 111.120 14 11.974 15.407 19.742 25.196 32.030 40.565 51.186 50359 1955 15 14.129 24.086 31 23 403585133 56542454 217.795 16 16672 22.186 29.384 38741 50 8516 4515504112139 304913 17 19.673 89 4.072 50 112455 24 125,879 18 23214 59 0 731108890 145 152 195391 597530 19 27.393 53.358 73.854 101721 139.380 190.050 257.916 35669 20 32.324 65.09 91.9 120.169 178.406 247065 340.419 1171.356 21 3142 55206 79.418 113574 161450 228.350 32.184 408.390 1691 22 45.008 66247 96.29140301 203.480 282.300 41753 58.19 229585773 53.109 79.497 116.205 174,631 256.385 974.144 542.801 763.073 214.200 24 82509 5.36 144210 2162321045478.505705541 10.10 0 23 73999 114.475 175.806 268.512407031612.99 $17.333 134.00200125 87.260 137371 2142 312 5 123677 .638 1192533 1800.927 1976 27 1027 16 MS 2614412114 212 1901 1902912371724 172. 7 2R 15711 DICIEL Present Value of $1.00 1 + In this table S - $1.00 Periods % 40% Polos 0 2% 0.980 0.961 0.942 0.924 0.906 0.888 0871 0353 17% .893 0.797 0.712 0.636 0.567 0 5 6 7 0 % 0.962 0.925 0.899 0.855 0.22 0.790 0.750 0.731 0.703 0.676 0.650 0.625 0.001 0.577 0.555 0.534 0.513 % 0.943 0.890 0.840 0.792 0.747 0.705 0.565 0527 0.592 0.558 0.527 0.497 0.469 0837 0.877 0.769 0575 0.592 0.519 0456 0.400 0.351 0.309 0.270 0.237 0208 0182 0.820 0.804 0799 % 0.926 0.857 .794 0.735 0.681 0.630 0.583 0.540 0.500 0463 0429 0.297 0.368 0.40 0.315 0.292 0.270 0.250 0.232 0.215 0.199 0.184 0.170 0.158 0.146 0.135 195 10% 0.909 0.826 0.751 0.683 0.621 51 0.513 0.457 0.424 0.385 0.350 0.319 0.290 0.263 0.239 0.218 0.98 0.180 0.164 0.149 .135 0.12 0.112 0.102 0.092 0.084 0.773 0.758 15 0.743 0.728 0.714 180.700 0.686 20 0.673 0.660 0.647 23 0.634 0.522 0.610 26 0598 27 AKO 16% 18% 20% 0.862 0.347 0.13 0.743 0718 0 .594 0.541 0.509 0 .579 0.552 0516 0.487 0.437 0402 0.370 023 0.314 0229 0.266 0713 0.225 0.194 0.191 0.162 0.195 0.162 0.135 0.137 0.112 0.145 0.116 0.093 0.125 0.099 0.078 0.108 0.084 0.065 0093 0.071 0.054 0.00000600.045 0.069 0 051 0038 0.060 0.043 0.031 0.051 0.037 0.026 0.044 0.001 0.022 0.038 0026 0.018 0.033 0022 0.015 0 028 0 019 0.013 0.024 0.016 0.010 0.021 0.014 0.009 AR 11 A 0.150 26% 20% 30 0.806 0.71 0.781 0.759 0.550 .630 0.610 0.58 0.524 0.500 0.477 0.455 0.423 0.397 0373 0.350 0.341 0.315 0.291 0259 0.275 0.250 0.22 0.20 0.722 0.19 0.178 0.15 0.179 0.157 0.179 0.123 0.144 0.125 0.108 0094 0.116 0.099 0.073 0.094 0.079 0066 0056 0.076 0.002 0.052 0043 0.061 0.05 0.040 0.033 0190 009 0 032 0.025 0.010 0 031 0.025 0.020 0.032 0.025 0.019 0,015 0026 0.02000150012 0.021 0016 0.012 09 0.017 0.012 0.0090.007 0.014 0.010 0.007 0.005 0.011 0008 0.005 0.004 0.009 0006 0.00 0.00 0.007 0.005 0.003 0.002 0.006 0.004 0.003 0.002 0.005 0.003 0.002 0.001 0.004 0.002 0.002 0.001 A A 0.820 0.572 0.551 0.451 0.370 0.33 0.249 0.204 0.167 0137 0112 0.092 0.075 0062 0.051 0.042 0034 0.028 0.023 0.019 0015 0 013 0010 0.008 .007 0.006 A 0.452 0 404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.093 0.083 0.074 0.066 0.059 0.053 147 0 0.758 0.714 0574 0.510 0.435 0.354 0.329 0260 0.250 0.186 0.19 0.133 0.143 0.095 0.102 0 068 0.0820048 0.052 0035 0.047 0025 0.035 0018 12 0.027 0.013 13 0.021 0.009 14 0.016 0006 15 0,012 0005 16 0.009 0.00317 0.007 0.002 18 0.005 0.002 19 0.004 0.001 2 0 0.003 0.001 2 1 0.002 0.001 7 2 0.002 0.000 2 3 0.001 0.000 24 0.001 0.000 0.001 0.000 A A 0417 0.394 0.371 0.250 0.331 0312 0.294 0.278 0.262 0.247 0.233 0.220 2 0.475 0.456 0.439 0.422 0.406 0.390 0.375 0.361 1217 0 0.140 0.123 0.108 0.095 0.083 0.073 0.064 0056 0049 0043 0.038 0.033 Am 0 Print Done Compound Amount of Annuity of $1.00 in Arrears (Future Value of Annuity 8,- (1 + - 1 6 6 10 11 12 13 14 15 16 17 1.000 2020 3.000 4122 5204 .308 7434 BASR3 9.755 10 990 12.169 13412 14.680 15.974 17.283 18.829 20.012 21412 22841 24297 25.783 27.299 28.845 30.422 32.030 33.671 0% 10% 10% 10% 10% 10% 20% 20% 20% 20% 20% 20% 12 % Periods 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1 2040 2.060 2.080 2.100 2.120 2.140 2.160 21802.200 2 .720 2.240 2.250 2.280 2200 2220 2.400 2. 3.122 3.184 3.246 3310 3.374 3.440 3.506 3572 3.640 3.708 3778 3.848 3.918 3.990 4.062 43603 42464.31754.506 4541 4719 48215.066 5215 539 5594 5.684 SBAR 6016 618 6362 7104 4 5416 5.8375.8675105 5353 5.610 6.8777154 7442 7740 .048 8.368 8.700 9043 9398 10.965 6.613 5.975 7.336 7.716 8.115 8336 39779442 9930 10.442 10.90 11.544 12.136 12.756 13.406 16.324 6 7898 894 .973 9.487 10.089 10.730 11.414 12.142 12.916 13.740 1 4,615 15.546 16534 17583 18.686 23.853 7 9.214 9.897 10.637 11.436 12 200 13223 14.240 15 227 16.499 17.762 19.123 20.588 22 163 22.858 25.678 34 395 8 10.583 11.491 1248 13.579 14.776 16.085 17.519 19 086 20.79922570 24.71225940 29.359 32.015 34.895 49. 153 9 12.00 13.18114487 15.93717519 19 317 21.321 23.521 25.959 28 657 31 643 34.945 38.590 42519 4 7.062 69814 10 13485 14.972 16 645 18.531 20.655 23.045 25.733 28.75532.150 35 962 40.738 4 5031 50.348 56.405 62172 9 8.739 11 15.026 16,870 18.977 21.384 24.133 27.271 30.850 34.331 39,581 4.874 50,895 57.739 65.510 74.377 84.320 139.235 12 15 627 18282 21495 24523 28.029 32 089 36.785 42 21948.497 55 746 64 110 73751 348 97675 112300 1 95979 13 19.292 21.015 24 215 27.97522.293 37,581 43.6725081859.196 010 30.496 3.926 109.612 127.91314920 2 75300 14 20.024 23.276 27.152 31.772 37.280 43.842 51.860 60.965 72.035 85.192 100.815 119.347 141.300 167.286 197.997 386.420 15 21.825 25.523 30.324 35950 42.753 50.000 60.925 729987442 104 105 126.011 151.37181.88 218.472 262356 5 41.989 16 23.098 28.213 33.750 40545 48 884 59.118 71.573 87,068 105,931 129020157.253 191.735 233.791 285.04 347.309 7 59.784 17 25.645 30.90637450 45.599 55.750 68.39484.141 100.740 128.117 158.405 195.994 242.585 300.252 371.518 459.449 1061.697 18 27671 33.760 41.44651.159 63.440 78.569 8603 173.414 154.740 194.254 24.033 306.658385.323 0973 607472109157611 29.778 36,786 45.762 57.275 22.062 91,025 115.380 146.628186.688 237.09 303,601 387.389 491.213 600.166 802.383 2003.2002 31.909 39.983 50.423 64.002 81.699 104.768 131.841 174.021 225.026 291.37 377.465 489.110 33.560 20.215 1060.7792925.889 21 34.248 43.392 55.457 71.400 32,503 120.436 157415 206345 271.031 356.443 409.056 617.278 811.999 1057.280 1401729 4097.24522 36,618 46,996 60.89379543 104.603 138.297 163.601 244.487 326.237 435,861 582.630 778.771 1010.358 1388.464 1850.622 5737.142 23 39.083 50.816 66.76588497 118.155 158.659 213.978 289.494 392.484 532.750723.461 962.251 1332.659 1805.000 2443.821 8032.999 24 41.546 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 650.955 898.092 1238.636 1706.803 2348.803 3226.844 11247.19925 44.312 59.156 79.954 109.182 150 334 208.333 290,088 405.272 567.377 795.165 1114.634 1561.682 2185.7083054.44 4250.434 15747.07926 19 20 21 22 26 Present Value of Annuity $1.00 in Arrears 2008 4.713 3312 7.375 Periods 1 % % 1 ORO 0.962 093 1.92 18 1.833 2.884 2.775 2573 3.630 3.465 4.4524212 5601 5.242 4917 6.472 6.002 5.582 6.733 6.210 9 8.162 7435 6.802 108 .983 8.111 760 119 .787 8.780 7887 12 10.5759185 8.394 13 11.348 9.986 8.853 14 12.106 1053 9.295 15 12.849 11.118 9712 16 13.578 11,652 10 105 17 14.292 12 166 10.477 18 14.992 12.659 10.829 19 15.678 13.134 11.158 20 1 6,351 13.590 11.470 21 17.011 14.029 11.764 22 17.658 14.451 12.042 23 18.292 14,857 12 303 24 18.914 15 247 12.550 25 19.523 15.622 12.783 26 20.121 15.983 13.003 10% 10% 10% 10% 15% 20% 20% 25% 2 % Pred 0925 0.909093 092 087 089 099 080 0714 0.71 078 0714 1.783 1736 1590 1 547 1505 1565 1529 1.497 14571 04 1.390 1.351 2577 2487 1231 1724 24022 2 2246 2174 2106 2042 1981 1903 198 1815 1756 1929 2170 309 2914 2.798 2690 2.589 2494 2404 2200 2241 2.155 300 2096 1849 3791 3.6053433 3.274 2127 29912854 2.635 2512 206 2345 2005 5 4623 4255 4.111 388935863498 3326 1157 3.020 2035 2759 2543 25342158 5206 4.858 4564 4789 4099 3.812 3605 2416 320 3063 280 29022577 2283 5.747 5.335 4.968 45394344 4028 38373619 342122413075 2975 2796 2218 62475.759 5328 4.946 4607 4303 4031 3.785 3566 2.366 3184 10192.168 279 9 5.7105 .145 5550 5216 4833 4.494 4.190 3.973 3.5R2 2465 3.299 3092 290 2414 10 7.1296 .495 5938 5.453 5.029 4656 4327 40053775 3543 3.315 3147 2979 2018 11 755 6.814 6.194 5660 5.19747934419 4127 3851 366 337 3190 30132456 12 7904 7103 5424 5.842 5.342 4910 4533 4203 3 912 3.656 3.427 3 723 3.040 2469 13 8.244 7357 6.628 6002 5.468 5008 4611 4.265 3 2 3695 3.4593 209 3.051 2478 14 8.559 7 606 6,811 6.142 5575 5.0924 575 43154 001 2726 34R 3258 3075 2.434 15 8.851 7 824 6974 6.265 5.668 5.1624.730 4.357 4023 3751 352 373 30 2019 16 91228.022712063735.749 5222 4775 4.391 4,059 2771 3518 17953097 2492 17 93728.2017.250 6.457 58185273 48124419 4.000 78 3529 3.04 3104 2.494 18 9.604 8.365 7.366 6.550 5.877 5.316 4.843 4.442 4,097 3.799 3.539 3.311 3.109 2.496 19 9 818 8.514 7469 6.623 5.929 5.353 4.870 4.460 4.110 3.808 3545 3316 3.113 2497 20 10.017 8 649 7 562 6 687 5.973 5384 4.891 4.476 4.121 3.816 3.55 3.320 3.116 2498 21 6.7438 .011 10 20187727645 5.410 4.909 4.ABR 4130 3822 3956 3.033.118 2.498 22 10321 7 718 6.702 8 883 6044 5432 4925 4.499 4,137 3827 3.125 3559 3120 2.49923 10.529 9 85 7784 6.835 24 6,073 5451 4917 4.5024 143 2.49 3.31 3.5623 327 3.121 9.077 10.675 7 843 .873 5.467 6 6.097 4.948 4.514 3.329 2.499 4.147 3.834 3.122 25 3.564 3837 3.300 5.480 4520 3.566 3.173 10.810 161 4956 4.151 2.500 9 7 6 006 26 896 6,118