CORRECT ANSWERS ONLY THANK YOU ) Problem 16 41 Net Present Value Total Cost Approach (Section 1) (LO 16 1, 16 3) The chief ranger of the state's Department of Natural Resources is considering a new plan for fighting forest fires in the state's forest lands The current plan uses eight fire control stations, which are scattered throughout the interior of the state forest Each station has a four person staff, whose annual compensation totals $320,000 Other costs of operating each base amount to $220,000 per year The equipment at each base has a current salvage value of $240,000 The buildings at these interior stations have no other use To demolish them would cost $22,000 each The chief ranger is considering an alternative plan, which involves four fire control stations located on the perimeter of the state forest Each station would require a six person staff, with annual compensation costs of $420,000 Other operating costs would be $230,000 per base Building each perimeter station would cost $320,000 The perimeter bases would need helicopters and other equipment costing $620,000 per station Half of the equipment from the interior stations could be used at the perimeter stations Therefore, only half of the equipment at the interior stations would be sold if the perimeter stations were built The state uses a 10 percent hurdle rate for all capital projects Use Appendix A for your reference (Use appropriate factor(s) from the tables provided ) Required 1 Use the total cost approach to prepare a net present value analysis of the chief ranger's two fire control plans (Assume that the interior fire control stations will be demolished if the perimeter plan is selected The chief ranger has decided to use a 10 year time period for the analysis ) (Round your Discount factors to 3 decimal places Negative amounts should be indicated by a minus sign ) NPV of Interior Fire Control Stations NPV of Perimeter Fire Control Stations Difference in NPV Costs Future Value and Present Value Tables Table Future Value of $1 000 Period 49 0 101 149 20 100 1 000 1 080 ICO 1 100 1 200 2 1 O 1 166 1210 1 254 0 1440 1125 1 191 1 40 1 305 12 4 LIO 1 363 1861 1 574 1 609 2014 5 5 1211 1 338 1611 1 762 1 925 6 1419 1 772 1 974 2 195 2 936 1 56 1 714 7 1310 1 50 1919 2211 2 502 3 583 8 136 1 851 2 476 2 353 2 144 2359 1423 1 690 1 999 2 773 3 100 9 10 1430 1 191 2 150 20 3 100 3 702 1 596 2853 3 479 4 226 OF 2 332 2 518 12 2012 3 396 4 IS 3 916 13 2 133 2 720 4164 5 492 10 61 14 1 732 2031 3700 LT 6 261 12 50 2 36 297 15 1 50 ULIE 3414 7 135 15 07 20 1612 3 307 4 67 9 646 13 743 333 3 744 10 063 11450 10 236 21 725 45 200 93 051 50 950 237 330 151 530 1 109 300 4 301 Table (1 Future Value of a series of $100 Cash Flows Ordinary Annuity a 1 F Period 4 0 10 12 20 1 1 000 1 000 1 000 1 000 2 2010 2 000 2 000 2 100 2 120 2 140 2 230 3 122 3310 30 360 4 4 247 4375 1506 4 6 11 4 779 5 364 5 3 5 410 561 5 561 6 100 6 353 6 610 7 42 6 661 6975 7 3 36 7 716 3 115 3 5 36 200 7 590 5 239 8 92 9 437 10 000 10 7 30 12 910 8 9 10601 14 12 00 1323 16 9 9 10 5 11 491 12483 13 500 14 76 16 065 20790 10 1200 13 151 14487 15 95 17 540 19337 35 00 11 13 40 14972 1666 18531 20655 21045 32 150 12 15 00 16870 13 97 21 24 13 27271 13 167 15 21 49 34523 73 009 32 009 48 497 14 210 27 976 3756 51 15 20 034 2017 27 157 31 773 37 330 4342 72035 20 29 770 45 70 57 276 75 052 91005 156 00 30 7005 11330 161496 2010 356700 116000 40 95 026 154 72 299057 442 597 767090 1,342 000 7 343 900 Fico TI Tabla 1 Present Value of $100 (1 0 10 12 14 14 16 10 20 22 24 201 20 362 333 520 00 000 2 3 10 477 455 000 435 4 5 20 250 790 10 143 7 8 123 10 Period 4 30 32 943 50983377 753 390151 3 26 2 200 343 718 094 612 546 24751 712 615 541 609 579 551 524 500 792 335 683 636 592 552 516 482 451 347 661 621 567 519 476 437 402370 341 315 700641364 456 410 370 385 205 215 220 221 2017 700 668 58313 402 400354 384 299 249 222 193 173 731 427 56 407 40 351 395 386 233 20 179157139 703 92 300 424 361 36263 223 194 167 146 123 105 5583 396 322270 227 191 162 127 116 085 073 527 49 350 27 237 195 162 135 12 084 079066056 011 497 397 319 257 206 168 137 112092076 062052943 469 290 229 182 145 116 093 075 100 940 112 340 26 05 160 125 099 073 062 09009 417 315 299 185 140 105 04 06 05 040 001 312 215 14 104 073061 037 036 019 001 003020012002 2060 9 09 052 10 676 02 11 TO 12 13 690 625 501 577 555 19 036 027 021 016 14 020 025 020 ON Ons 15 456 010 00 005 004 20 30 40 014 02 174 03 000 100 004 DI 06 001011 005 003 001 Table IV Proson value of Sories of $100 Cash Flow atm) SOE 0 70 1 361 1 316 2 166 2 4 6 Period 4 6 0 10 12 18 101 20 22 24 25 20 1 0 962 0 93 0 926 0 00 0 9930377 0 362 034 0 3 200 06 0 300 0 7940 731 2 2 1 330 1 783 1736 1600 1690 164 1 566 1 528 149 1457 1 440 1 424 1 392 3 2 775 2623 2577 2 2 402 2 40223222246 2 174 2 246 2 114 2 106 2042 1951 1952 1 923 1360 4 3 6 30 3 465 3 312 3 170 3 037 2914 2798 2 6790 2 599 2494 2 404 252 2320 2341 5 412 30 3 191 3 605 3433 3 27 2 122 2 364 2 745 2 09 2015 2532 6 49 4 4 11 3655 3 326 3 167 $167 3 020 2 951 2355 2 75 7 002 5 58 50 4 366 4 561 435500 3 812 3 00 3 416 32 32423 161 3 063 2 937 3 6 733 6210 3 747 3 35 4 965 4659 454 4078 5619 3 21 3 241 3 07 7 435 0302 3 750 5 325 4946 100 20 4 03 3 7363 3 366 2 184 10 S 111 7 360 6710 6 145 5 6505216 4 333 4 94 39233652 3 652 3 571 3 465 3 269 11 5 760 7 387 7 139 6 195 6 09 5 935 5453 5 000 4 327 4035 3 776 3656 3 5443335 12 7 536 6 314 6 194 5600 519 5 1974 193 4 439 4127 4 127 851 3 725 3 6063357 13 06 7001 7 100 6 43 53 532 2010 4 533 3012730 36563427 14 10 563 7 7 6 625 600 5 3 000 4 265 3962 3 524 15 11 118 5507606 6 12 5575 5 092 4673 4315 4001 3 650 3 75 20 13 0 11470 9 818 514 7 460 6623 66239 59295 353 48104460 4 4504110 4110 3 954 30 30 17 292 13 00 11 250 9 3 065 7 003 6 177 5 517 4 979 4 534 4160 3 995 3 500 40 19 793 15 046 11 925 9 7793 244 7 105 6 234 5 548 4997 4544 4 166 3 990 3 546 3 571 260 2 302 2 925 3 3 092 RO 3 190 3 23 ESSE 3 365 3 316 3 32 3 330

Question

CORRECT ANSWERS ONLY  THANK YOU    ) Problem 16 41 Net Present Value  Total Cost Approach (Section 1) (LO 16 1, 16 3) The chief ranger of the state's Department of Natural Resources is considering a new plan for fighting forest fires in the state's forest lands  The current plan uses eight fire control stations, which are scattered throughout the interior of the state forest  Each station has a four person staff, whose annual compensation totals $320,000  Other costs of operating each base amount to $220,000 per year  The equipment at each base has a current salvage value of $240,000  The buildings at these interior stations have no other use  To demolish them would cost $22,000 each  The chief ranger is considering an alternative plan, which involves four fire control stations located on the perimeter of the state forest  Each station would require a six person staff, with annual compensation costs of $420,000  Other operating costs would be $230,000 per base  Building each perimeter station would cost $320,000  The perimeter bases would need helicopters and other equipment costing $620,000 per station  Half of the equipment from the interior stations could be used at the perimeter stations  Therefore, only half of the equipment at the interior stations would be sold if the perimeter stations were built  The state uses a 10 percent hurdle rate for all capital projects  Use Appendix A for your reference  (Use appropriate factor(s) from the tables provided ) Required  1  Use the total cost approach to prepare a net present value analysis of the chief ranger's two fire control plans  (Assume that the interior fire control stations will be demolished if the perimeter plan is selected  The chief ranger has decided to use a 10 year time period for the analysis ) (Round your  Discount factors  to 3 decimal places  Negative amounts should be indicated by a minus sign ) NPV of Interior Fire Control Stations NPV of Perimeter Fire Control Stations Difference in NPV Costs Future Value and Present Value Tables Table Future Value of $1 000 Period 49 0  101 149 20    100 1 000 1 080 ICO 1 100 1 200 2 1 O 1 166 1210 1 254 0 1440 1125 1 191 1 40 1  305 12 4 LIO 1 363 1861 1 574 1 609 2014 5 5 1211 1 338 1611 1 762 1 925 6 1419 1 772 1 974 2 195 2 936 1 56 1 714 7 1310 1 50  1919 2211 2 502 3 583 8 136 1 851 2 476 2 353 2 144 2359 1423 1 690 1 999 2 773 3 100 9 10 1430 1 191 2 150 20 3 100 3 702 1 596 2853 3 479 4 226 OF 2 332 2 518 12 2012 3 396 4 IS 3 916 13 2 133 2 720 4164 5 492 10 61 14 1 732 2031 3700 LT 6 261 12 50 2 36 297 15 1 50 ULIE 3414 7 135 15 07 20 1612 3 307 4  67 9 646 13 743 333 3 744 10 063 11450 10 236 21 725 45 200 93 051 50 950 237 330 151 530 1 109 300 4 301 Table (1  Future Value of a series of $100 Cash Flows Ordinary Annuity a  1 F Period 4  0  10  12  20 1 1 000 1 000 1 000 1 000 2 2010 2 000 2 000 2 100 2 120 2 140 2 230 3 122 3310 30 360 4 4 247 4375 1506 4 6 11 4 779 5 364 5 3 5 410 561 5 561 6 100 6 353 6 610 7 42 6 661 6975 7 3 36 7 716 3 115 3 5 36 200 7 590 5 239 8 92 9 437 10 000 10 7 30 12 910 8 9 10601 14 12 00 1323 16  9 9 10 5 11 491 12483 13 500 14 76 16 065 20790 10 1200 13 151 14487 15 95 17 540 19337 35 00 11 13 40 14972 1666 18531 20655 21045 32 150 12 15 00 16870 13 97 21 24 13 27271 13 167 15 21 49 34523 73 009 32 009 48 497 14 210 27 976 3756 51 15 20 034 2017 27 157 31 773 37 330 4342 72035 20 29 770 45 70 57 276 75 052 91005 156 00 30 7005 11330 161496 2010 356700 116000 40 95 026 154 72 299057 442 597 767090 1,342 000 7 343 900 Fico TI Tabla 1 Present Value of $100 (1  0  10  12  14  14  16  10  20  22  24  201 20 362 333 520 00  000 2 3 10 477 455 000 435 4 5 20 250 790 10 143 7 8 123 10 Period 4  30  32  943 50983377 753 390151 3 26 2 200 343 718 094  612 546 24751 712 615 541 609 579 551 524 500  792 335 683 636 592 552 516 482 451 347 661 621 567 519 476 437 402370 341 315 700641364 456 410 370 385 205 215 220 221 2017 700 668 58313 402 400354 384 299 249 222 193 173 731 427 56 407 40 351 395 386 233 20 179157139 703 92 300 424 361 36263 223 194 167 146 123 105 5583 396 322270 227 191 162 127 116 085 073 527 49 350 27 237 195 162 135 12 084 079066056 011 497 397 319 257 206 168 137 112092076 062052943 469 290 229 182 145 116 093 075 100 940 112 340 26 05 160 125 099 073 062 09009 417 315 299 185 140 105 04 06 05 040 001 312 215 14 104  073061 037 036 019  001 003020012002 2060 9 09 052 10 676 02 11 TO 12 13 690 625 501 577 555 19 036 027 021 016 14 020 025 020 ON Ons 15 456 010 00 005 004 20 30 40 014 02 174 03 000 100 004 DI 06 001011 005 003 001 Table IV Proson value of Sories of $100 Cash Flow   atm) SOE 0 70 1 361 1 316 2 166 2 4 6 Period 4  6  0  10  12 18  101 20  22  24  25  20  1 0 962 0 93 0 926 0 00 0 9930377 0 362 034 0 3 200 06 0 300 0 7940 731 2 2 1 330 1 783 1736 1600 1690 164 1 566 1 528 149 1457 1 440 1 424 1 392 3 2 775 2623 2577 2 2 402 2 40223222246 2 174 2 246 2 114 2 106 2042 1951 1952 1 923 1360 4 3 6 30 3 465 3 312 3 170 3 037 2914 2798 2 6790 2 599 2494 2 404 252 2320 2341 5 412 30 3 191 3 605 3433 3 27 2 122 2 364 2 745 2 09 2015 2532 6 49 4  4 11 3655 3 326 3 167 $167 3 020 2 951 2355 2 75 7 002 5 58 50 4 366 4 561 435500 3 812 3 00 3 416 32 32423 161 3 063 2 937 3 6 733 6210 3 747 3 35 4 965 4659 454 4078 5619 3 21 3 241 3 07 7 435 0302 3 750 5 325 4946 100 20 4 03 3 7363 3 366 2 184 10 S 111 7 360 6710 6 145 5 6505216 4 333 4 94 39233652 3 652 3 571 3 465 3 269 11 5 760 7 387 7 139 6 195 6 09 5 935 5453 5 000 4 327 4035 3 776 3656 3 5443335 12 7 536 6 314 6 194 5600 519 5 1974 193 4 439 4127 4 127 851 3 725 3 6063357 13 06 7001 7 100 6 43 53 532 2010 4 533 3012730 36563427 14 10 563 7 7 6 625 600 5  3 000 4 265 3962 3 524 15 11 118 5507606 6 12 5575 5 092 4673 4315 4001 3 650 3 75 20 13 0 11470 9 818 514 7 460 6623 66239 59295 353 48104460 4 4504110 4110 3 954 30 30 17 292 13 00 11 250 9  3 065 7 003 6 177 5 517 4 979 4 534 4160 3 995 3 500 40 19 793 15 046 11 925 9 7793 244 7 105 6 234 5 548 4997 4544 4 166 3 990 3 546 3 571 260 2 302 2 925 3  3 092 RO 3 190 3 23 ESSE 3 365 3 316 3 32 3 330

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CORRECT ANSWERS ONLY. THANK YOU!! :) Problem 16-41 Net Present Value; Total-Cost Approach (Section 1) (LO 16-1, 16-3) The chief ranger of the state's Department

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