EX 16-34 (Algo) Profitability Index; Taxes (Section 2) (LO 16-7) The owner of Atlantic City Confectionary is considering the purchase of a new semiautomatic candy machine. The machine will cost $20,000 and last 11 years. The machine is expected to have no salvage value at the end of its useful life. The owner projects that the new candy machine will generate $4,700 in after-tax savings each year during its life (including the depreciation tax shield). Use Appendix A for your reference. Note: Use appropriate factor(s) from the tables provided. Required: Compute the profitability index on the proposed candy machine, assuming an after-tax hurdle rate of (a) 6 percent, (b) 8 percent, and (c) 10 percent. Note: Round your final answers to 2 decimal places. After-Tax Hurdle Rate Profitability Index (a) 6 percent (b) 8 percent 8 (c) 10 percent Future Value and Present Value Tables Table I Future Value of $1.00(1+r)" duction/bne/Hilton 13e/Appendix A1tolV.htm Period 4% 6% 8% 10% 12% 14% 20% 1 1.040 1.060 1.030 1.100 1.120 1.140 1.200 2 1.082 1.124 1.166 1210 1.254 1.300 1.440 3 1125 1.191 1.260 1.331 1.405 1.482 1.728 4 1.170 1.263 1.361 1.464 1.574 1.689 2.074 5 1.217 1.338 1.469 1.611 1.762) 1.925 2.488 6 1.265 1.419 1.587 1.772 1.974 2.195 2.986 7 1.316 1.504 1.714 1.949 2.211 2.502 3.583 S 1.369 1.594 1.851 2.144 2.476 2.853 4.300 9 1.423 1.690 1999 2.359 2.773 3.252 5.160 10 1480 1.791 2.159 2.594 3.106 3.707 6.192 11 1.540 1.898 2.332 2.853 3.479 4.226 7.430 12 1601 2012 2.513 3.139 3.896 4.818 8.916 13 1665 2.133 2.720 3.452 4.364 5.492 10.699 14 1.732 2.261 2.937 3,798 4.887 6.261 12.839 15 1.801 2.397 3.172 4.177 5.474 7.138 15.407 20 2.191 3.207 4.661 6.723 9.646 13.743 38.338 30 3.243 5.744 10.063 17.450 29.960 50.950 237.380 40 4.301 10.286 21.725 45.260 93.051 188.880 1,469.300 A B ED Table II Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity)(((1+r)" -1)+r) Period 4% 6% 8% 10% 12% 14% 20% 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.060 2.080 2.100 2.120 2.140 2.220 3 3.122 3. 184 3.246 3.310 3.374 3.440 3.640 4 4.247 4.375 4.506 4.641 4.779 4.921 5.368 5 5.416 5.637 5.867 6.105 6.353 6.610 7.442 6 6.633 6.975 7.336 7.716 8.115 8.536 9.930 7 7.898 8.394 8.923 9.487 10.089 10.730 12.916 S 9.214 9.898 10.637 I1.436 12.300 13.233 16.499 9 10.583 11.491 12.488 13.580 14.776 16.085 20.799 10 12.006 13.181 14.487 15.938 17.549 19.337 25.959 11 13.486 14.972 16.646 18.531 20.655 23.045 32.150 12 15.026 16.870 18.977 21.385 24.133 27.271 39.580 13 16.627 18.882 21.495 24.523 28.029 32.089 48.497 14 18.292 21.015 24.215 27.976 32.393 37.581 59.196 15 20.024 23.276 27.152 31.773 37.280 43.842 72.035 20 29.778 36.773 45.762 57.276 75.052 91.025 186.690 30 56.085 79.058 113.283 164.496 241.330 356.790 1,181.900 40 95.026 154.762 259.057 442.597 767.090 1.342.000 7,343.900 Table III Present Value of $1.00 (1+(1+r)") Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% I 962 943 926 909 893 877 862 847 833 820 806 794 781 769 758 2 925 890 857 826 797 769 743 718 694 672 650 630 610 592 574 3 889 840 794 751 712 675 641 609 579 551 5241 500 477 455 435 4 855 792 735 683 636 592 552 516 482 4511 423 397 373 350 329 5 822 747 681 621 567 519 4761 437 402 370 341 315 291 269 250 6 790 705 630 564 507 456 410 370 335 303 275 250 227 207 189 7 760 665 583 513 452 400 354 314 279 249 222 198 178 159 143 S 731 627 540 4671 404 351 305 266 233 204 179 157 139 123 108 9 703 592 500 4241 361 308 263 225 194 167 144 125 108 2094 082 10 676 558 463 386 322 270 227 191 162 137 116 099 085 073 062 11 650 527 429 350 287 237 195 162 135 112 094 079 066 056 047 12 625 497 397 319 257 208 168 137 112 092 076 062 052 043 036 13 601 469 368 290 229 182 145 116 093 075 061 050 040 033 027 14 577 442 340 263 205 160 125 099 078 062 0491 039 032 0251 021 15 355 417 315 239 183 140 108 084 065 051 040 031 025 020 016 20 456 312 215 149 1041 073 051 037 026 019 0141 010 007 005 004 30 308 174 099 057 033 020 0121 007 004 003 002 001 001 40 208 097 046 022 011 005 .003 001 001 Table IV Table IV Present Value of Series of $1.00 Cash Flows 1/r (1-(1+(1+*))) Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30 1 0.962 0943 0.926 0.909 0.893 0877 0.862 0847 0.833 0.820 0.806 0.800 0.794 0.781 0 2 1.886 1.833 1.783 1.736 1.690 1647 1.605 1.566 1528 1492 1457 1.440 1424 1.392 1 3 2.775 2673 2.577 2.487 2402 2322 2246 2.174 2.106 2042 1981 1.952 1923 1.868 11 4 3.630 3.465 3312 3.170 3037 2914 2.798 2.690 2.589 2.494 2.404 2.362 2320 2.241 2 5 4.452 4.212 3.993 3791 3.605 3.433 3274 3.127 2.991 2864 2.745 2.689 2635 2.532 2 6 5242 4.917 4.623 4355 4.111 3889 3.685 3.498 3.326 3.167 3.020 2.951 2.885 2759 23 7 6.002 5.582 5.206 4.868 4.564 4.258 4039 3812 3.605 3416 3.242 3.161 3083 2937 21 8 6.733 6210 5.747 5335 4.968 4.639 4344 4.078 3.837 3619 3.421 3.329 3.241 3.076 21 9 7.435 6.502 6247 5.759 5.328 4.946 4.607 4.303 4.031 3.786 3.566 3.463 3366 3.184 31 10 7360 6.710 6145 5.650 5.216 4.833 4.494 4.192 3923 3.682 3:571 3.465 3.269 31 11 8.760 7.887 7.139 6.495 5.938 5.453 5.029 4656 4.327 4.035 3.776 3.656 3544 3335 3 12 9385 8.384 7.536 6.8141 6.194 5.660 5.197 4.793 4.439 4.127 3.851 3725 3.606 3387 3 13 9.986 8.853 7.904 7.103 6424 5.842 5.342 4.910 4533 4203 3.912 3.780 3656 3427 3. 14 10 563 9.295 8:244 7367 6.628 6.002 5.468 5.008 4611 4.265 3.962 3.824 3.695 3459 3 15 11.118 9.712 8559 7.606 6811 6.142 5575 5.092 4675 4315 4.001 3.859 3.726 3.483 3. 20 13.590 11.470 9818 8.514 7.469 6.623 5.929 5353 4870 4460 4.110 3954 3808 3546 3 30 17292 13.765 11.258 9427 8055 7.003 6.177 5.517 4.979 4.534 4.160 3.995 3.842 3.569 40 19.793 15.046 11925 9.779 8.244. 7.105 6234 5.545 4997 4544 4.166 3999 3.846 3571