Figure 14-10.

Present value of $1

Periods	4%	6%	8%	10%	12%	14%
1	0.962	0.943	0.926	0.909	0.893	0.877
2	0.925	0.890	0.857	0.826	0.797	0.769
3	0.889	0.840	0.794	0.751	0.712	0.675
4	0.855	0.792	0.735	0.683	0.636	0.592
5	0.822	0.747	0.681	0.621	0.567	0.519
6	0.790	0.705	0.630	0.564	0.507	0.456
7	0.760	0.665	0.583	0.513	0.452	0.400
8	0.731	0.627	0.540	0.467	0.404	0.351
9	0.703	0.592	0.500	0.424	0.361	0.308
10	0.676	0.558	0.463	0.386	0.322	0.270

Present value of an Annuity of $1

Periods	4%	6%	8%	10%	12%	14%
1	0.962	0.943	0.926	0.909	0.893	0.877
2	1.886	1.833	1.783	1.736	1.690	1.647
3	2.775	2.673	2.577	2.487	2.402	2.322
4	3.630	3.465	3.312	3.170	3.037	2.914
5	4.452	4.212	3.993	3.791	3.605	3.433
6	5.242	4.917	4.623	4.355	4.111	3.889
7	6.002	5.582	5.206	4.868	4.564	4.288
8	6.733	6.210	5.747	5.335	4.968	4.639
9	7.435	6.802	6.247	5.759	5.328	4.946
10	8.111	7.360	6.710	6.145	5.650	5.216

12. Refer to Figure 14-10. Johnson Company is considering an investment that will have an initial cost of $500,000 and yield annual net cash inflows of $130,000. Yearly depreciation will be $100,000. The equipment is expected to be useful for five years, at which point it will be scrapped with no salvage value. Johnson requires a minimum rate of return of 10 percent.

A.	What is the accounting rate of return?
B.	What is the net present value? Is the investment acceptable?
C.	Now suppose that Johnson believes it can sell the equipment at the end of 5 years for $50,000. What is the net present value? Is the investment acceptable?
D.	What can you say about the IRR in the first case (no salvage value) versus the IRR in the second case ($50,000 salvage value)? Note: You do not need to figure out the IRR for this problem.