Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year Initial investment 1. 2. 3. Net Cash Flows Project 1 Project 2 $(50,000) $(70,000) 10,000 35,000 25, 300 22,000 30,000 25,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute payback period for each project. Based on payback period, which project is preferred? (Cumulative net cash outflows must be entered with a minus sign. Do not round your intermediate calculations. Round your Payback Period answer to 2 decimal places.) Project 1 Project 2 Year Cumulative Net Net Cash Cumulative Net Cash Flows Cash Flows Flows Net Cash Flows Initial investment $ (50,000) $ (50,000) $ (70,000) Year 1 10,000 Year 2 25,300 Year 3 30,000 Payback period Project 1 Payback period years Project 2 Payback period years Based on payback period, which project is preferred? 0 Required A Required B Compute net present value for each project. Based on net present value, which project is preferred? (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Net Cash Flows Present Value Factor Present Value of Net Cash Flows $ 0 0 Project 1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project 2 Year 1 Year 2 0 Year 3 0 $ 0 Totals $ Initial investment Net present value Based on net present value, which project is preferred? $ 0 Table B.1* Present Value of 1 p=1/(1 + i)" Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.7972 0.8696 0.7561 2 0.9803 0.9612 0.9246 0.9070 0.8900 0.8734 0.8417 0.8264 2 0.9426 0.9151 0.8573 0.7938 3 0.9706 0.9423 0.8890 0.8638 0.8396 0.8163 0.7722 0.7513 0.7118 0.6575 3 4 0.9610 0.8548 0.8227 0.7921 0.7629 1 0.6355 0.5718 4 0.9238 0.9057 0.8885 0.8626 0.7350 0.6806 0.7084 0.6499 0.6830 0.6209 5 0.9515 0.8219 0.7835 0.7473 0.7130 0.5674 0.4972 5 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 6 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 7 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5019 0.4665 0.4039 8 0.5403 0.5002 9 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.4604 0.4241 0.3606 0.3269 0.2843 0.2472 0.9143 0.9053 9 10 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 10 11 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4289 0.3875 0.3505 0.2875 0.2149 11 0.4751 0.4440 12 0.7014 0.6246 0.5568 0.3186 12 0.8874 0.8787 0.7885 0.7730 0.4970 0.4688 0.3971 0.3677 0.3555 0.3262 0.2567 0.2292 0.1869 0.1625 13 0.6810 0.6006 0.5303 0.4150 0.2897 13 14 0.8700 0.7579 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 14 0.6611 0.6419 15 0.8613 0.7430 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 15 0.1229 0.1069 16 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 16 0.1631 0.1456 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.0929 17 18 0.4936 0.4155 0.2959 0.0808 18 0.8360 0.8277 0.7002 0.6864 0.5874 0.5703 0.3503 0.3305 0.2502 0.2317 0.2120 0.1945 0.1799 0.1635 0.1300 0.1161 19 0.4746 0.3957 0.2765 0.0703 19 ele 20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 20 III 25 0.7798 0.6095 0.4776 0.3751 0.2953 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 25 30 0.5521 0.4120 0.3083 0.2314 0.2330 0.1741 0.1301 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7419 0.7059 30 35 0.5000 0.3554 0.2534 0.1813 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 35 40 0.6717 0.4529 0.3066 0.2083 0.1420 0,0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 40 *Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n = 12 and i = 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5,000 x 0.5568). I LLUE TU VET f = (1 + i)" Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0 1.0000 1.0100 1.0201 1.0000 1.0500 1 1.0200 1.0300 1.0400 1.0800 1.1200 1.1500 1 1.0600 1.1236 1.0900 1.1881 1.0404 1.0609 1.0816 1.1025 1.0700 1.1449 1.2250 1.2544 1.0000 1.1000 1.2100 1.3310 1.4641 2. 3 1.3225 2 1.1664 1.2597 1.0303 1.0612 1.0927 1.1249 1.1576 1.1910 1.2950 1.4049 1.5209 3 4 1.0406 1.1255 1.1699 1.2625 1.3108 1.3605 1.4116 1.5735 1.7490 4 1.0824 1.1041 5 1.0510 1.1593 1.2167 1.3382 1.4026 1.4693 1.5386 1.7623 2.0114 5 1.2155 1.2763 1.3401 1.4071 1.6105 1.7716 6 1.0615 1.1262 1.1941 1.2653 1.4185 1.5007 1.5869 1.6771 1.9738 2.3131 6 7 1.1487 1.3159 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 2.6600 7 1.0721 1.0829 1.2299 1.2668 8 1.1717 1.3686 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 3.0590 8 9 1.3048 1.6895 1.4775 1.5513 1.6289 1.9990 3.5179 1.1951 1.2190 9 1.4233 1.4802 1.8385 1.9672 2.1719 2.3674 10 1.3439 1.7908 2.1589 4.0456 1.0937 1.1046 1.1157 1.1268 2.7731 3.1058 3.4785 10 2.3579 2.5937 2.8531 3.1384 11 1.2434 1.3842 1.5395 1.7103 1.8983 2.1049 2.3316 2.5804 4.6524 11 12 1.2682 1.4258 1.6010 2.2522 2.5182 2.8127 3.8960 5.3503 12 1.7959 1.8856 2.0122 2.1329 13 1.1381 1.2936 1.4685 2.4098 2.7196 3.0658 3.4523 * 4.3635 6.1528 13 1.6651 1.7317 14 1.3195 1.5126 2.2609 2.5785 2.9372 3.3417 4.8871 7.0757 14 1.1495 1.1610 TTT 15 1.3459 1.5580 1.8009 1.9799 2.0789 2.1829 2.3966 5.4736 2.7590 2.9522 15 3.7975 4.1772 4.5950 3.1722 3.4259 3.6425 3.9703 8.1371 9.3576 16 1.1726 1.6047 1.8730 2.5404 6.1304 16 1.3728 1.4002 17 1.1843 1.6528 1.9479 2.2920 2.6928 3.1588 3.7000 4.3276 5.0545 6.8660 17 10.7613 12.3755 18 1.1961 1.4282 1.7024 2.0258 2.4066 2.8543 3.3799 3.9960 4.7171 5.5599 7.6900 18 19 1.4568 1.7535 3.0256 3.6165 4.3157 5.1417 6.1159 8.6128 14.2318 19 1.2081 1.2202 1.2824 2.1068 2.1911 2.5270 2.6533 20 1.4859 1.8061 3.2071 4.6610 5.6044 IT 6.7275 16.3665 3.8697 5.4274 20 9.6463 17.0001 25 1.6406 2.0938 3.3864 4.2919 6.8485 8.6231 10.8347 32.9190 25 30 1.8114 2.4273 5.7435 7.6123 10.0627 13.2677 17.4494 29.9599 66.2118 30 1.3478 1.4166 2.6658 3.2434 3.9461 4.8010 35 1.9999 2.8139 TT 4.3219 5.5160 7.0400 10.6766 20.4140 28.1024 35 40 7.6861 10.2857 14.7853 21.7245 52.7996 93.0510 133.1755 267.8635 1.4889 2.2080 3.2620 14.9745 31.4094 45.2593 40 *Used to compute the future value of a known present amount. For example: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n = 20 and i = 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4.457.70 ($3.000 x 1.4859). Table B.3f Present Value of an Annuity of 1 p= [1 - 1/(1 + i)"]/i Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 0.9901 0.9709 0.9615 0.9434 0.9346 0.9174 0.8929 1 0.9804 1.9416 0.9524 1.8594 0.9259 1.7833 0.9091 1.7355 0.8696 1.6257 2 1.9704 1.9135 1.8861 1.8334 1.8080 1.6901 2 1.7591 2.5313 3 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.4869 2.4018 2.2832 3 4 2.9410 3.9020 4.8534 3.6299 3.3872 3.3121 3.2397 3.1699 3.0373 4 3.8077 4.7135 3.7171 4.5797 3.5460 4.3295 3.4651 4.2124 2.8550 3.3522 5 4.4518 4.1002 3.8897 3.7908 3.6048 5 6 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.4859 4.3553 4.1114 3.7845 6 4.7665 5.3893 3.9927 4.6229 5.2064 5.7466 7 6.2303 5.0330 4.5638 7 6.7282 7.6517 5.7864 6.4632 5.5824 6.2098 6.0021 6.7327 7.4353 8 4.1604 4.4873 7.0197 5.9713 6.4720 7.3255 8.1622 8.9826 4.8684 5.3349 5.7590 4.9676 8 5.5348 5.9952 9 8.5660 7.7861 6.2469 5.3282 9 7.1078 7.7217 6.5152 7.0236 4.7716 5.0188 10 9.4713 6.8017 7.3601 7.8869 8.5302 8.1109 6.7101 6.4177 6.1446 5.6502 10 11 10.3676 9.7868 9.2526 8.7605 UL 8.3064 7.4987 6.4951 5.9377 11 6.8052 7.1607 5.2337 5.4206 12 11.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 6.8137 6.1944 12 13 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.1390 7.5361 7.9038 8.2442 8.5595 7.4869 7.1034 6.4235 5.5831 13 14 10.5631 9.8986 9.2950 8.7455 7.7862 7.3667 6.6282 5.7245 14 13.0037 13.8651 12.1062 12.8493 15 11.2961 11.9379 12.5611 11.1184 10.3797 9.7122 9.1079 8.0607 7.6061 6.8109 5.8474 15 16 14.7179 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 16 13.5777 14.2919 5.9542 6.0472 17 15.5623 11.2741 9.7632 8.5436 7.1196 17 12.1657 12.6593 9.1216 9.3719 13.1661 13.7535 14.3238 8.0216 8.2014 18 16.3983 14.9920 10.0591 8.7556 7.2497 6.1280 18 11.6896 12.0853 10.4773 10.8276 11.1581 11.4699 19 17.2260 15.6785 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 13.1339 13.5903 19 20 18.0456 16.3514 14.8775 12.4622 10.5940 9.8181 7.4694 6.2593 20 8.5136 9.0770 25 22.0232 15.6221 12.7834 6.4641 25 10.6748 11.2578 30 7.8431 8.0552 17.2920 9.4269 11.6536 12.4090 12.9477 6.5660 19.5235 22.3965 24.9986 27.3555 25.8077 29.4086 32.8347 30 9.1285 9.8226 10.2737 10.5668 10.7574 17.4131 19.6004 21.4872 23.1148 14.0939 15.3725 16.3742 17.1591 35 13.7648 14.4982 15.0463 18.6646 9.6442 8.1755 6.6166 35 11.6546 11.9246 40 19.7928 13.3317 9.7791 8.2438 6.6418 40 *Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%? For (n = 10,i = 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 6.4177). Table B.4$Future Value of an Annuity of 1 f=[(1 + i)" - 1]/i Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1 2 2.0100 2.0200 2.0300 2.0500 2.1200 2.1500 2 2.0400 3.1216 2.0600 3.1836 2.0800 3.2464 2.0900 3.2781 2.1000 3.3100 3 3.0301 3.0604 3.0909 3.1525 3.3744 3.4725 3 2.0700 3.2149 4.4399 5.7507 4 4.1836 4.2465 4.3746 4 4.0604 5.1010 4.1216 5.2040 4.3101 5.5256 4.5061 5.8666 4.6410 6.1051 4.7793 6.3528 4.9934 6.7424 5 5.3091 5.4163 5.6371 5 4.5731 5.9847 7.5233 9.2004 6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.7156 8.1152 8.7537 6 7 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938 8.9228 10.0890 11.0668 7 8.6540 10.2598 8 8.8923 9.8975 10.6366 12.2997 8 8.2857 9.3685 8.5830 9.7546 9.2142 10.5828 9.5491 11.0266 9.4872 11.4359 13.5795 15.9374 13.7268 16.7858 9 10.1591 12.4876 11.0285 13.0210 15.1929 14.7757 11.4913 13.1808 9 I 10 10.4622 10.9497 12.0061 12.5779 11.9780 13.8164 15.7836 14.4866 17.5487 20.3037 11.4639 12.8078 10 H 11 11.5668 12.1687 13.4864 14.2068 14.9716 16.6455 17.5603 18.5312 20.6546 11 12 12.6825 13.4121 14.1920 15.0258 16.8699 15.9171 17.7130 12 17.8885 20.1406 24.3493 29.0017 34.3519 24.1331 28.0291 . 13 14.6803 16.6268 18.8821 Lula 20.1407 22.9534 26.0192 13.8093 14.9474 13 14 15.9739 18.2919 19.5986 21.0151 18.9771 21.4953 24.2149 27.1521 30.3243 22.5505 32.3926 40.5047 15.6178 17.0863 18.5989 20.1569 14 21.3843 24.5227 27.9750 31.7725 35.9497 40.5447 15 16.0969 17.2934 20.0236 21.5786 23.2760 25.1290 37.2797 15 29.3609 33.0034 T TI I 47.5804 55.7175 16 17.2579 18.6393 21.8245 23.6575 25.6725 27.8881 42.7533 16 17 18.4304 25.8404 28.2129 30.8402 33.7502 48.8837 e 65.0751 17 20.0121 21.4123 23.6975 25.6454 36.9737 41.3013 18 30.9057 18 19.6147 20.8109 21.7616 23.4144 25.1169 26.8704 33.9990 37.3790 45.5992 51.1591 19 22.8406 46.0185 37.4502 41.4463 45.7620 27.6712 29.7781 19 28.1324 30.5390 33.0660 47.7271 33.7600 36.7856 20 22.0190 51.1601 20 24.2974 32.0303 57.2750 98.3471 25 36.4593 41.6459 54.8645 73.1059 25 28.2432 34.7849 41.6603 55.7497 75.8364 63.4397 88.2118 72.0524 102.4436 133.3339 212.7930 241.3327 434.7451 431.6635 881.1702 767.0914 | 1,779.0903 84.7009 136.3075 30 47.5754 56.0849 66.4388 40.9955 63.2490 94.4608 138.2369 199.6351 113.2832 40.5681 49.9945 30 79.0582 111.4348 35 60.4621 73.6522 90.3203 172.3168 215.7108 164.4940 271.0244 442.5926 35 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 259.0565 337.8824 40 $Used to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%? For (n = 6,i = 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 x 7.3359)