Exercise 14-2 (Algo) Net Present Value Analysis [LO14-2] The management of Kunkel Company is considering the purchase of a $40,000 machine that would reduce operating costs by $9.500 per year At the end of the operating costs by $9,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 13%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to dotermine the annronriato discount factorle) using tablo Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Net present value EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears; [+] Periods 4% 2 3 4 $ 6 7 8 9 7435 7.108 10 8.111 7.722 " 8.760 8.306 12 9.385 8.863 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 2.283 2246 2.210 2.174 2140 2.106 2.074 2.042 2011 1.981 1.952 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2.494 2.448 2.404 2.362 4452 4329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2.951 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.1601 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 6.802 6515 6247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 7.360 7.024 6.710 6418 6.145 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 3.776 3.656 8.384 7.943 7.536 7.161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4.127 3.985 3.851 3.725 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5342 5.118 4.910 4.715 4.533 4362 4.2031 4.053 3.912 3.780 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4432 4.265 4.108 3.962 3.824 11.118 10.380 9.712 9.108 559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 4.153 4.001 3859 11.652 10.838 10.106 9447 8851 8313 7.824 7.379 6.974 6.604 6.265 5.954 5668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4,033 3.887 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5818 5.534 5.273 5.033 4.812 4.608 4419 4.243 4.080 1928 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 4.263 4.097 3.942 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4.121 3.963 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6011 5.696 5.410 5.149 4.909 4.690 4.4KK 4.302 4.130 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 6.792 6.399 6044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 15.247 13.790 | 12.550 11.469 10.529 9,707 8.985 8348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6373 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.347 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906. 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 3.990 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7.470 6983 6.551 6.166 5.820 5.510 5.229 4.975 4.743 4.531 4.337 4.159 1.994 17.292 15.372 13.765 12.409 11.258 10.274 9427 8.604 8.055 7.496 7.001 6.566 6.177 5.829 5.517 5.215 4.979 4.746 4.534 4.339 4.160 1.995 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6233 5.871 5.548 5.258 4.997 4.760 4,544 4347 4.166 1.999 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0,893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0813 0.806 0.500 1.336 1859 1.833 1.808 1.783 1.759 1.736 1713 1690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1474 1457 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 1.440 EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears; [1] 969 - 3.037 4.833 4.659 4.494 4.339 4.192 4,054 3.923 3.799 3.682 3.571 Periods 4% 5% 7% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.306 0.800 1.886 1.859 1833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 2.577 2.531 2487 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2074 2.042 2011 1981 1.952 3.312 3.240 3.170 3.102 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2.494 2448 2.404 2.362 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 4.767 4.623 4.486 4355 4,231 4.111 3.998 3389 3.784 3,685 3.589 1.498 3410 3:326 3.245 3.167 3,092 3.020 2.951 5.389 5.206 5.033 4368 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3416 3.327 3.242 3.161 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 1.786 3.673 3.566 3.463 8.111 7.722 7360 7.024 6.710 6418 6.145 5.889 5.650 5.426 5.216 5019 8.760 8.306 7.887 7,499 7.139 6.805 6.495 6207 5.938 5.687 5.4531 5.234 5.029 4.836 4.656 4,486 4.327 4.177 4.035 3.902 3.776 3.656 9.385 8.863 8.384 7.943 7.536 7.161 6814 6.492 6.194 5918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4.127 3.985 3.851 3.725 9.986 9.394 8853 8.358 7.904 7.487 7.103 6.750 6424 6122 5.342 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3912 3.780 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.302 4.611 4.432 4.265 4.108 3.962 3.824 8.559 8,061 7.606 7.191 6.811 6462 6.142 5847 5.575 5.324 5.092 4876 4.675 4489 4.315 4.153 4.001 3.859 8.851 8.3131 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5475 5.222 4.990 4.775 4.576 4391 4.219 4.059 3.910 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 13.134 12.085 11.158 10.336 9.604 X.950 K365 7.366 6938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 4.263 4097 3,942 7469 7.025 | 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4657 4.460 4.279 4.110 3.954 7.562 7.102 6.687 6312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4.121 3.963 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8176 7.645 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4:488 4.302 4.130 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7,718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 15.247 13.799 12.550 11.469 10.529 9.707 8.985) 8.348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.467 5.195 4.948 4.721 4.514 4.323 4.147 1.985 15.983 14 375 13.003 11.826 10810 9.929 9.161 84KK 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6514 6.136 5.798 5.492 5.215 4964 4.734 4.524 4.332 4.154 3,990 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4528 4.335 4.157 3.992 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7.470 6.983 6.551 6.166 5820 5.510 5229 4.975 4,743 4.531 4.337 4,159 1.994 17.292 15.372 13.765 12.409 11.258 10.274 9427 8,694 8,055 7.496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4.347 4.166 3.999 2 3 2.775 2.723 2.673 2.624 4 3.630 3.546 3.465 3.387 5 4.452 4.329 4.212 4.100 6 5.242 5.076 4,917 7 8 6.002 5.786 6.733 6.463 6210 5.582 9 10 11 12 13 14 10.563 9.899 9.295 8.745 15 11.118 10.380 9.712 9.108 16 11.652 10.838 10.106 9.447 17 18 19 20 21 13.590 12.462 11.470 10.594 9.818 9.129 8514 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.963 8.075 22 23 24 25 26 27 28 29 30 40 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8951 7.839 5.766