EXHIBIT 12B-1 Present Value of $1; Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 10.962 0952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0885 0877 0.870 0.862 0855 0.847 0.840 0.833 0.826 0820 0.813 0.806 0800 2 0.925 0.907 0.890 0873 0.857 0.842 0826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.661 0650 0.640 3 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0712 0693 0675 0658 0641 0624 0609 0.593 0.579 0.564 0.551 0537 0.524 0.512 0.534 0.516 0499 0.482 0467 0451 0437 0423 0.410 5 0.822 0784 0747 0.713 0.681 0650 0.621 0.593 0.567 0.543 0.519 0.497 0476 0456 0.437 0419 0402 0.386 0.370 0.355 0.341 0.328 6 0790 0746 0705 0666 0.630 0596 0564 0.535 0.507 0480 0.456 0432 0410 0.390 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0262 7 0.760 0.711 0665 0623 0.583 0.547 0513 0.482 0.452 0425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0249 0.235 0.222 0.210 8 0.731 0677 0627 0.582 0.540 0502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0285 0.266 0249 0.233 0.218 0.204 0191 0.179 0.168 9 0.703 0645 0.592 0.544 0.500 0460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0167 0155 0.144 0.134 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0162 0149 0137 0126 0.116 0.107 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0178 0.162 0148 0135 0.123 0112 0.103 0.094 0.086 12 0.625 0.557 0497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0187 0168 0152 0137 0.124 0112 0102 0.092 0083 0.076 0.069 13 0.601 0.530 0469 0,415 0.368 0.326 0.290 0.258 0229 0.204 0182 0163 0145 0130 0.116 0104 0093 0084 0075 0068 0061 0055 14 0.577 0.505 0.442 0.388 0.340 0299 0.263 0.232 0.205 0.181 0.160 0.141 0125 0111 0.099 0088 0.078 0.069 0062 0055 0.049 0.044 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0183 0160 0.140 0123 0.108 0.095 0.084 0.074 0.065 0.0570.051 0.045 0.040 0.035 16 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0163 0141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 17 0.513 0.436 0.371 0.317 0.270 0.231 0198 0.170 0146 0125 0.108 0093 0.080 0069 0060 0052 0.045 0039 0.034 0030 0026 0.023 18 0.494 0.416 0.350 0296 0.250 0212 0.180 0153 0130 0111 0095 0081 0069 0059 0.051 0044 0038 0032 0028 0024 0021 0018 19 0.475 0.396 0.331 0.277 0.232 0194 0164 0.138 0.116 0098 0.083 0.070 0060 0051 0043 0037 0.031 0.027 0023 0020 0.017 0.014 20 0.456 0.377 0.312 0.258 0.215 0178 0.149 0.124 0.104 0087 0.0730.061 0.051 0.043 0.037 0.031 0026 0.022 0.019 0.016 0.014 0.012 21 0.439 0.359 0.294 0.242 0.199 0164 0.135 0.112 0.093 0077 0.064 0.053 0.044 0.037 0.031 0026 0022 0.018 0.015 0.013 0.011 0.009 22 0.422 0.342 0.278 0.226 0.184 0150 0123 0.101 0083 0068 0.056 0046 0038 0032 0026 0022 0.018 0.015 0.013 0011 0009 0.007 23 0.406 0.326 0.262 0.211 0.170 0138 0112 0.091 0074 0060 0.049 0040 0033 0027 0022 0018 0015 0.012 0.010 0009 0007 0.006 24 0.390 0.310 0247 0197 0158 0126 0102 0.082 0066 0053 0.043 0.035 0028 0023 0.019 0015 0013 0010 0008 0007 0006 0.005 25 0.375 0.295 0.233 0.184 0146 0116 0.092 0.074 0059 0047 0038 0030 0.024 0020 0.016 0.013 0.010 0.009 0007 0006 0.005 0.004 26 0.361 0.281 0.220 0.172 0135 0.106 0.084 0.066 0053 0042 0033 0026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0005 0.004 0.003 27 0.347 0.268 0.207 0161 0125 0098 0076 0.060 0047 0037 0029 0023 0018 0014 0.011 0009 0.007 0006 0005 0004 0003 0.002 28 0.333 0.255 0.196 0.150 0.116 0.090 0.069 0.054 0.042 0033 0.026 0.020 0.016 0.012 0.010 0.008 0006 0.005 0.004 0.003 0.002 0.002 29 0.321 0.243 0.185 0.141 0107 0082 0.063 0.048 0037 0029 0022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0002 0.002 0.002 30 0.308 0231 0174 0.131 0.099 0075 0057 0044 0033 0026 0020 0.015 0012 0009 0.007 0005 0004 0.003 0003 0002 0002 0.001 40 0.208 0142 0097 0067 0046 0032 0.022 0015 0.011 0008 0005 0004 0003 0002 0.001 0.001 0001 0.000 0000 0000 0000 0.000 4 0.855 0.823 0.792 0.763 0735 0.708 0.683 0659 0636 0613 0.5 0.572 0.5 EXHIBIT 12B-2 Present Value of an Annuity of $1 in Arrears; 1 - - Periods 4% 5% 6% 7% 8% 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 0833 0.826 0.820 0.813 0.806 0.800 21.886 1859 1833 1808 1783 1759 1736 1.713 1.690 1.668 1647 1626 1605 1585 1566 1547 1528 1509 1.492 1.474 1.457 1440 3 2.775 2723 2.673 2.624 2.577 2.531 2487 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2140 2.106 2.074 2.042 2.011 1.981 1952 4 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 5 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3696 3605 3.517 3.433 3.352 3.274 3199 3127 3058 2.991 2.926 2.864 2.803 2.745 2.689 6 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 3167 3.092 3.020 2.951 7 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 8 6.733 6.463 6.210 5.971 5747 5.535 5.335 5146 4.968 4799 4639 4.487 4.344 4.207 4.078 3954 3.837 3726 3619 3.518 3421 3.329 9 7435 7108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5132 4.946 4.772 4607 4.451 4.303 4.163 4.031 3.905 3.786 3673 3.566 3.463 10 8111 7722 7.360 7024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4.833 4659 4494 4.339 4.192 4.054 3.923 3799 3.682 3.571 11 8.760 8.306 7887 7499 7139 6.805 6.495 6.207 5938 5.687 5453 5.234 5.029 4.836 4656 4486 4.327 4177 4.035 3.902 3776 3656 12 9.385 8.863 8.384 7943 7536 7161 6814 6492 6194 5.918 5.660 5.421 5197 4.988 4.793 4.611 4.439 4278 4127 3.985 3.851 3.725 13 9.986 9.394 8853 8.358 7904 7487 7103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 14 10.563 9.899 9.295 8745 8.244 7.786 7367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4.432 4.265 4.108 3.962 3.824 15 11.118 10.380 9.712 9.108 8.559 8.061 7606 7191 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 3.859 16 11.652 10.838 10.106 9.447 8.851 8.313 7824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4357 4.189 4.033 3.887 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7549 7120 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 18 12.659 11.690 10.828 10.059 9.372 8756 8.201 7702 7250 6.840 6.467 6128 5818 5.534 5.273 5.033 4812 4.608 4.419 4.243 4.080 3.928 19 13.134 12.085 11.158 10.336 9604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4635 4.442 4.263 4.097 3.942 20 13.590 12.462 11.470 10.594 9.818 9129 8.514 7963 7469 7025 6623 6259 5.929 5628 5.353 5101 4870 4657 4.460 4.279 4.110 3.954 21 14.029 12.821 11764 10.836 10.017 9.292 8.649 8.075 7562 7102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4.121 3.963 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8176 7645 7170 6.743 6.359 6.011 5.696 5.410 5149 4909 4690 4.488 4.302 4.130 3.970 23 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7718 7230 6792 6.399 6044 5723 5.432 5167 4.925 4.703 4.499 4.311 4137 3.976 24 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7784 7.283 6.835 6.434 6.073 5.746 5.451 5182 4.937 4713 4.507 4.318 4.143 3.981 25 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4948 4.721 4.514 4.323 4.147 3.985 26 15.983 14.375 13.003 11.826 10.810 9.929 9161 8488 7896 7.372 6906 6.491 6118 5783 5480 5.206 4.956 4728 4.520 4.328 4151 3.988 27 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8548 7.943 7409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 3.990 28 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7984 7441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 29 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 5.820 5.510 5.229 4.975 4.743 4.531 4.337 4.159 3.994 30 17292 15.372 13.765 12.409 11.258 10.274 9.4278.694 8.055 7.496 7003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995 40 19.793 17159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7634 7105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4.347 4.166 3.999 I'm not sure we should lay out $295,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $83,000 for software and installation, and another $46,800 per year just to maintain the thing. In addition, the manufacturer admits it would cost $46,000 more at the end of three years to replace worn-out parts I admit it's a lot of money," said Franci Rogers, the controller. "But you know the turnover problem we've had with the welding crew. This machine would replace six welders at a cost savings of $113,000 per year. And we would save another $7,400 per year in reduced material waste, when you figure that the automated welder would last for six years, I'm sure the return would be greater than our 19% required rate of return." "I'm still not convinced," countered Mr. Alder. "We can only get $16,500 scrap value out of our old welding equipment if we sell it now and in six years the new machine will only be worth $29,000 for parts. But have your people work up the figures and we'll talk about them at the executive committee meeting tomorrow. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables Required: 1. Compute the annual net cost savings promised by the automated welding machine. 2a. Using the data from (1) above and other data from the problem, compute the automated welding machine's net present value 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment