EXHIBIT 10-1 Present Value of $1 P- F. 305 Period 48 3% 6% 85 18% 20% 225 24% 26% 28% 40% 1 0.962 0 952 0943 0926 0909 0.893 0877 08620547 083 08200806 0.794 0.781 0769714 2 0.923 0.907 0.590 0.557 0.826 0.797 0.769 0.743 0.715 0.694 0.672 0.650 0.630 0.610 0.592 0.510 3 0.899 0564 0340 0794 0751 0712 0675 0641 060905790551 0.524 0.500 0477 0255 0164 4 0.853 0.923 0.792 0.735 0.663 0.636 0.592 0.552 0.516 0.482 0.451 0.423 0.397 0.373 0.350 0.200 5 0832 0784 747 0681 0621 0567 0319 0476 047 0402 0370 0341 0315 000 02690186 6 0.790 0.746 0.705 0.630 0.561 0.507 0.4560.410 0.370 0.335 0.303 0.275 0.250 0.227 0.207 0.133 7 760 0711 1665 053 1513 45204000354 0314 D9 020 0 195 0178 0159 03 0.73 0.677 0.627 0.500 0.167 0.001 0.351 0.305 0.266 0.233 0.20 0.179 0.157 0.139 0.123 0.068 0 D 04 D OSKI 1) 414 0.361 DO 0763 07750194 0167 D144 017 01 04 0048 10 0.676 0.611 0.556 0.163 0.356 0.322 0.270 0.227 0.191 0.162 0.137 0.116 0.099 0.065 0.073 0.035 11 OS 03 04 1) 0787 D 0 1950 162 D1 112 1914 19 DX001560 12 0.625 0.557 0.197 0.397 0.319 0.257 0.206 0.165 0.137 0.112 0.092 0.076 0.062 0.032 0.013 0.018 1 DO 140 (X DO 0 1450 116 X 15 1050 DIND D01 11 0.377 0.505 0.412 0.310 0.263 0.205 0.160 0.125 0.099 0.076 0.002 0.019 0.039 0.002 0.025 0.009 15 0330 041 041 0315 140 IN DINO (11 Da OGI 16 0.534 0.156 0.391 0.292 0.218 0.163 0.123 0.093 0.071 0.054 0.012 0.002 0.025 0.019 0,015 0,005 0313 04:56 1371 02 D 194 146010000000045 0034 DDO DDIS 001200 15 0.491 0.416 0.350 0.250 0.150 0.130 0.095 0.069 0.051 0.038 0.025 0.021 0.016 0.012 0.009 0.002 19 045 031 D164 0116 DO 0 0043 D011 0023 DDI 0012 DO ID002 20 0.456 0.377 0.312 0.213 0.19 0.104 0.073 0.051 005 D026 0019 D D14 0010 D D 0001 21 049 0359 0294 01990135 DO 0044 0.031 0.022 0.015 0.0110.00 0.00 0.00 0.001 22 0.422 0.342 0.275 0.184 0.123 0.063 0.056 0.038 0026 008 0013 009 0006 D004 003 0001 23 0406 0326 0262 017001120014 009 0043 0.022 0.015 0.010 0.007 0.005 0.003 0.002 24 0.390 0.30 0.247 0.158 0.1020.066 0.043 0.025 0019 00130008000600000000002 25 0375 0295 0233 0146 D D 0038 0004 0016 0.00 0.007 0.005 0.003 0.002 0.001 26 0.361 0.281 0.220 0.133 0.054 0.053 0.033 0.021 0014 000 000 0004 0002 0002 0001 27 0347 0268 0.207 0.125 0076 0047 0029 001S0011 0.007 0.005 0.003 0.002 0.001 0.001 0.333 0.255 0.196 0.116 0.069 0.042 0.026 0.0160010 0.006 0004 0.002 0.002 00010001 29 0.321 0243 0.185 0.1070063 0.0070022 0.014 0.005 0.005 0.003 0.002 0.001 0.001 30 0.306 0231 0.174 0.099 0.057 0.003 0.0200012 0.007 0.004 0.003 0.002 0.001 0.001 40 0.008 0.142 0.097 0.046 0.022 0.011 0.003 0.002 0.001 0.001 EXHIBIT 10-2 Present Value of an Annuity of S1 1 P. Period SS 85 20% es 1 0.963 0952 0.943 0.926 2 1.836 1959 1.823 1.783 3 2.775 2.723 2673 2.577 3.312 4 3.630 3.500 3.365 5 4.452 43.30 4212 3.993 5.242 5076 4.917 7 6.002 3.786 3.382 5.206 6.733 6.163 6210 5.747 9 7.435 7.105 6.300 6247 10 8111 7.722 7.360 6.710 11 8.760 3.306 7. 7.139 12 9.335 S.963 7.536 13 9.986 9994 7.904 14 10.563 9999 3.244 9.295 9.712 13 3.559 10.380 10.3 108 145 185 225 24% 00% 0909 0.893 0.87705620547 0.833 0 820 0.506 0.79+ 0.751 070 0.714 1.736 1.690 1.647 1.605 1.566 1.528 1.492 1.457 1.424 1224 2.487 2.402 2.322 2246 2.174 2.106 2.042 1951 1.923 1.865 1.516 589 3.1703037 2914 2.798 2690 2.5892.49 2.404 2.320 2.241 2.166 1879 3.791 3605 3.433 3.274 3.127 2991 2.564 2.745 2635 2.532 2.436 2.035 4355 3.89 3.685 3498 3.326 3.167 3.020 2.885 2.759 2.643 2.168 4.568 456+ 4.255 4.039 3.512 3.600 3.416 3.242 3.083 2.937 2.302 2.263 5.335 4968 4344 4078 3.937 3.619 3.421 3.241 3.076 2925 2.331 5.759 5.328 4.946 4607 4303401 3.736 3.5663.366 3.154 3.019 2.379 5650 5.216 4833 4.1944.1923.923 3.662 3.465 3.269 3.092 2.414 6.493 5.938 3.453 3.029 4.656 4.327 4.035 3.776 3.544 3.335 3.147 2.438 6.814 6.194 5.660 5.197 4.793 4.439 4.127 3851 3.606 3.357 3.190 2.456 7.103 6.424 5.542 5.3424910 4533 4203 3.9123656 3.427 3.223 2468 7.367 6.628 6.0025.468 5008 4.611 4.265 3.962 3.695 3.459 3.29 2.477 7.606 6.511 6.142 3.575 5.092 4.675 4.315 4.001 3.726 3.483 3.268 2.484 7.824 6.974 6.265 5.669 5.162 4.730 4.357 4.033 3.751 3.500 3.283 2.489 3.0227120 6.373 5.749 5222 4775 4391 4059 3.771 3.518 3.295 2.492 3.201 7.250 6.467 5 SIS 5 273 4.812 4.419 4.060 3.756 3.529 3.304 2.494 S.365 7.366 6.550 5.877 5.316 4.844 4.442 4.097 3.799 3.339 3.311 2.496 8.514 7460 6,623 5.929 5.353 4.870 4.600 4.110 3.908 3.5.463.316 2.497 869 7.562 6,657 5973 5.364 4891 4476 4.121 3.816 3.551 3.320 2.498 8.772 7645 6.743 60115410 4.909 4.455 4.130 3822 3.556 3323 2.498 S.5837.718 6.792 6.792 6044 5.432 4.925 4.499 4.137 3.827 3.325 2.499 8.955 7784 6.535 6.8356073 5.451 4937 4.507 4.143 3.831 3.327 2.499 9.077 784) 6.873 6 573 6.09 5.467 4948 4514 3.329 2.499 9.161 7.896 6.906 6.906 6.118 5.490 4950 4520 4.151 3.837 3.330 2.500 9 237 7943 6.935 6.935 6.136 5.492 4.964 4.525 4.154 3.839 3.331 2.500 9307 7.934 6961 6.961 6.1525.5024970 4.528 4.157 3.840 3.331 2.500 9.370 S.022 6.983 6.953 6.166 5.510 4975 453141593.541 3.332 2.500 9.427 3.055 7.003 7003 6.177 5.517 4.979 4534 4.160 3.842 3.332 2.500 9.779 S. 244 7.105 7.105 6.234 5.545 4.997 +544 4.166 3.846 3333 2.500 16 11.652 10.100 3.851 17 18 12.166 12.650 11 274 11.690 10-477 10 528 9.122 9.372 19 13.134 12.005 11.158 9.004 20 11:40 9818 13.590 14.029 12.462 12.821 21 11.764 10017 22 14.451 12042 10.200 13.163 13.489 23 14.857 10.371 12.303 12.550 24 15.247 13.799 10.529 35 15622 14094 12.783 10.675 26 14 375 13.00 10.810 15.983 16.330 27 14.643 10.935 13.211 13.406 14890 11.051 16.663 16.954 17.292 15.141 13.591 11155 8 % % 5 15 373 13.765 11.258 11.925 19.793 17.159 15.046 Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: Assume that Martinas requires a 12% rate of return. Compute net present value in favor of (or against) keeping the property using the total-cost approach. (Round discount factor(s) to 3 decimal places and other intermediate calculations to the nearest dollar amount.) Net present value Raul Martinas, a professor of languages at Eastern University, owns a small office building adjacent to the university campus. He acquired the property 10 years ago at a total cost of $617,500that is, $96,500 for the land and $521,000 for the building. He has just received an offer from a realty company that wants to purchase the property; however, the property has been a good source of income over the years, and so Martinas is unsure whether he should keep it or sell it. His alternatives are as follows: a. Keep the property. Martinas's accountant has kept careful records of the income realized from the property over the past 10 years. These records indicate the following annual revenues and expenses: Martinas makes a $13,025 mortgage payment each year on the property. The mortgage will be paid off in eight more years. He has been depreciating the building by the straight-line method, assuming a salvage value of $78,150 for the building, which he still thinks is an appropriate figure. He feels sure that the building can be rented for another 15 years. He also feels sure that 15 years from now the land will be worth three times what he paid for it. $ 175,000 Rental receipts Less: Building expenses: Utilities Depreciation of building Property taxes and insurance Repairs and maintenance Custodial help and supplies Net operating income $ 28,400 17,714 21,000 11,100 57,250 135,464 39,536 b. Sell the property. A realty company has offered to purchase the property by paying $185,000 immediately and $42,000 per year for the next 15 years. Control of the property would go to the realty company immediately. To sell the property, Martinas would need to pay the mortgage off, which could be done by making a lump-sum payment of $128,000