he expects demand to stabilize. The following table presents the expected cash flows: In oddition to these cash flows. Aaron expects to pay $20,500 for the equipment. He also expects to pay $2,900 for a major overhaul and updating of the equipment at the end of the second year of operation. The equipment is expected to have a $1,900 salvage value and of four year useful life. Aaron desires to carn a rate of return of 10 percent. (PV of SI and PVA of SI) (Use appropriate factor(s) from the tables provided.) Required a. Calculate the net present value of the investment opportunity. (Negative amount should be indicated by a minus sign. Round intermediate calculations and final answer to 2 decimal places.) b. Indicate whether the investment opportunity is expected to earn a return that is above or below the desired rate of return and whether it should be accepted. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline & & 5% & 6% & & & 9% & & 12% & & 16% & 20 \\ \hline & 9615 & 0.952 & 0.943396 & 0.934 & .925926 & 0.917431 & 0.909 & 0.8928 & & \begin{tabular}{r} 0.862069 \\ 0 \end{tabular} & \\ \hline & & 0.907029 & & 0.8 & 0.857339 & 0.841680 & 0.826 & 0.797194 & 0.76946 & 0.743 & \begin{tabular}{l} 0.694444 \\ 0.578704 \end{tabular} \\ \hline & & 0.863838 & 0.8 & & 0.793832 & 0.772183 & 0.751315 & \begin{tabular}{l} 0.711 \\ 0.635 \end{tabular} & \begin{tabular}{l} 0.674972 \\ 0.592080 \end{tabular} & \begin{tabular}{l} 0.640658 \\ 0.552291 \end{tabular} & \begin{tabular}{l} 0.578 \\ 0.482 \end{tabular} \\ \hline & 0. & 0.822702 & 0.792094 & 0.762895 & 0.7 & 0.708425 & 0.683013 & 0.63 & \begin{tabular}{l} 0.5 \\ 0.5 \end{tabular} & 0.476113 & \begin{tabular}{l} 0.482 \\ 0.401 \end{tabular} \\ \hline & 0. & 0.7 & 0.747258 & 0.712986 & & 0.649931 & 0.620921 & & & 0.41 & 98 \\ \hline & 0. & 0.7 & 0.70 & 0.666342 & & & 0.51 & \begin{tabular}{l} 0.506631 \\ 0.452349 \end{tabular} & & & \\ \hline & 0.7 & & 0.665 & 0.622750 & 0.583490 & 0.5 & \begin{tabular}{l} 0.51 \\ 0.46 \end{tabular} & 0.40 & 0.3 & 0.30 & 0 \\ \hline & 0.73 & & 0.627 & 0.5820 & 0.540269 & \begin{tabular}{l} 0.501866 \\ 0.460428 \end{tabular} & \begin{tabular}{l} 0.46 \\ 0.42 \end{tabular} & & 0.3 & 53 & 0.1 \\ \hline 9 & 0.70 & 0.6 & 0.591 & 0.54 & \begin{tabular}{l} 0.500249 \\ 0.463193 \end{tabular} & \begin{tabular}{l} 0.460428 \\ 0.422411 \end{tabular} & \begin{tabular}{l} 0.42 \\ 0.38 \end{tabular} & & & 84 & 06 \\ \hline 10 & & & & 0.50 & & & & 0.2 & & & \\ \hline 11 & & & & & & & 1 & 0.2 & 0.2 & & \\ \hline & 0. & & 0.4 & & & & & & \begin{tabular}{l} 0.2 \\ 0.1 \end{tabular} & 0. & \\ \hline 13 & 00 & 0.5303 & 0.4 & 0.41 & & & & & \begin{tabular}{l} 0.1 \\ 0.1 \end{tabular} & & \\ \hline 14 & 7? & & & & & & & & & \begin{tabular}{l} 93 \\ 27 \end{tabular} & \\ \hline 15 & 0. & 0.4 & & & & \begin{tabular}{l} 0.2 \\ 0.2 \end{tabular} & & & & & 88 \\ \hline 16 & 0. & 0.4 & & 0.3 & & \begin{tabular}{l} 0.2 \\ 0.2 \end{tabular} & 0. & & & & \\ \hline 17 & & 0.4 & & & & & & & & & \\ \hline 18 & & & & & & 0.211 & & & & & 0.031301 \\ \hline 19 & & 0.3957 & & & & \begin{tabular}{l} 0.194490 \\ 0.178431 \end{tabular} & \begin{tabular}{l} 0.163508 \\ 0.148644 \end{tabular} & \begin{tabular}{l} 0.116107 \\ 0.103667 \end{tabular} & \begin{tabular}{l} 0.082948 \\ 0.072762 \end{tabular} & 0.051385 & 0.026084 \\ \hline 20 & 56387 & 0.376889 & 0.311805 & 0.258419 & 0.214548 & & & & & & \\ \hline \end{tabular} 2 PRESENT VALUE OF AN ANNUTTY OF $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline 4% & 5% & 6% & \begin{tabular}{l} 7% \\ 0.934579 \end{tabular} & \begin{tabular}{c} 8% \\ 0.925926 \end{tabular} & \begin{tabular}{c} 9% \\ 0.917431 \end{tabular} & \begin{tabular}{c} 10% \\ 0.909091 \end{tabular} & \begin{tabular}{c} 12% \\ 0.892857 \end{tabular} & \begin{tabular}{r} 14% \\ 0.87719 \end{tabular} & \begin{tabular}{c} 16% \\ 0.862069 \end{tabular} & \begin{tabular}{c} 20% \\ 0.833333 \end{tabular} \\ \hline \begin{tabular}{r} 0.961538 \\ 1.886095 \end{tabular} & \begin{tabular}{l} 0.952381 \\ 1.859410 \end{tabular} & \begin{tabular}{r} 0.943396 \\ 1.833393 \end{tabular} & \begin{tabular}{l} 0.934579 \\ 1.808018 \end{tabular} & \begin{tabular}{l} 0.925926 \\ 1.783265 \end{tabular} & \begin{tabular}{l} 0.917431 \\ 1.759111 \end{tabular} & \begin{tabular}{l} 0.909091 \\ 1.735537 \end{tabular} & \begin{tabular}{l} 0.892857 \\ 1.690051 \end{tabular} & \begin{tabular}{l} 0.877193 \\ 1.646661 \end{tabular} & \begin{tabular}{r} 0.862069 \\ 1.605232 \end{tabular} & \begin{tabular}{l} 0.8333333 \\ 1.527778 \end{tabular} \\ \hline \begin{tabular}{l} 1.886095 \\ 2.775091 \end{tabular} & 2.723248 & 2.673012 & 2,624316 & 2.577097 & 2.531295 & 2.486852 & 2,401831 & 2.321632 & 2.245890 & 2.106481 \\ \hline 3.629895 & 3.54595 & 3.465106 & 3.387211 & 3.312127 & 3.239720 & \begin{tabular}{l} 2.486852 \\ 3.169865 \end{tabular} & 3.037349 & 2.913712 & 2.798181 & \begin{tabular}{l} 2.106481 \\ 2.588735 \end{tabular} \\ \hline \begin{tabular}{l} 4.451822 \\ 5.242137 \end{tabular} & 4.329477 & 4.212364 & 4.100197 & 3.992710 & 3.889651 & \begin{tabular}{l} 3.16980 \\ 3.790787 \end{tabular} & 3.604776 & 3.433081 & \begin{tabular}{c} 2.798101 \\ 3.274294 \end{tabular} & \begin{tabular}{l} 2.588/39 \\ 2.990612 \end{tabular} \\ \hline \begin{tabular}{l} 5.242137 \\ 6,002055 \end{tabular} & 5.075692 & 4.917324 & 4.766540 & 4.622880 & 4.485919 & 4.35526 & 4.111407 & 3.888668 & 3.684736 & 3.325510 \\ \hline \begin{tabular}{l} 6.002055 \\ 6.732745 \end{tabular} & 5.786373 & 5.582381 & 5.389289 & 5.206370 & 5.032953 & 4.868419 & 4.563757 & 4.288305 & 4.038565 & 3.604592 \\ \hline \begin{tabular}{r} 6.732745 \\ 7.435332 \end{tabular} & 6.463213 & 6.209794 & 5.971299 & 5.746639 & 5.534819 & 5.334926 & 4.967640 & \begin{tabular}{l} 4.28830 \\ 4.63886 \end{tabular} & 4.343591 & 3.837160 \\ \hline \begin{tabular}{r} 7.435332 \\ 8.110896 \end{tabular} & 7.107822 & 6.801692 & 6.515232 & 6.246888 & 5.995247 & 5.759024 & 5.328250 & 4.946372 & 4.606544 & 4.030967 \\ \hline \begin{tabular}{l} 8.110896 \\ 8.760477 \end{tabular} & 7.721735 & 7.360087 & 7.023582 & 6.710081 & 6.417658 & 6.14456 & 5.650223 & 5.216116 & 4.833227 & 4.192472 \\ \hline \begin{tabular}{r} 8.760477 \\ 9.385074 \end{tabular} & 8.306414 & 7.886875 & 7.498674 & 7.138964 & 6.805191 & 6.495061 & 5.937699 & 5.452733 & 5.028644 & \begin{tabular}{r} 4.192472 \\ 4.327060 \end{tabular} \\ \hline \begin{tabular}{l} 9.385074 \\ 9.985648 \end{tabular} & 8.863252 & 6.383844 & 7.942686 & 7.536078 & 7.160725 & 6.813692 & 6.194374 & 5.660292 & 5.197107 & 4.439217 \\ \hline \begin{tabular}{r} 9.985648 \\ 10.563123 \end{tabular} & 9.393573 & 8.852683 & 8.357651 & 7.903776 & 7.48690 & 7.103356 & 6.42354 & 5.842362 & 5.342334 & 4.532681 \\ \hline \begin{tabular}{l} 9.963123 \\ 10.563118387 \\ 11,1183 \end{tabular} & 9.698641 & 9.294984 & 8.745468 & 8.244237 & 7.786150 & 7,366687 & 6.62816 & 6.002072 & 5.467529 & 4.610567 \\ \hline \begin{tabular}{r} 11.118387 \\ 11.652296 \end{tabular} & 10.379658 & 9.712249 & 9.107914 & 8.559479 & 8.060688 & 7.606080 & 6.810864 & 6,142168 & 5.575456 & 4.675473 \\ \hline \begin{tabular}{c} 11.652296 \\ 12.165669 \end{tabular} & 10.837770 & 10.105895 & \begin{tabular}{r} 9.107914 \\ 9.446649 \end{tabular} & 8.851369 & 8.312558 & 7.823709 & 6.973986 & 6.265060 & 5.668497 & 4.729561 \\ \hline \begin{tabular}{c} 12.165669 \\ 12.659297 \end{tabular} & 11.274066 & 10.477260 & 9.763223 & \begin{tabular}{l} 8.851369 \\ 9.121638 \end{tabular} & 8.543631 & 8.02155 & 7.119630 & 6.372859 & 5.74870 & 4.774634 \\ \hline \begin{tabular}{l} 12.659297 \\ 13.133939 \end{tabular} & 11.689587 & 10.827603 & 10.059087 & 9.371887 & 8.755625 & 8.201412 & 7.249670 & 6.467420 & 5.817848 & 4.812195 \\ \hline \begin{tabular}{r} 13.133939 \\ 13.590376 \end{tabular} & 12.085321 & 11.158116 & 10.335595 & 9.603599 & 8.905115 & 8.364920 & \begin{tabular}{l} 7.365777 \\ 7.469444 \end{tabular} & 6.550369 & 5.877455 & \\ \hline 13,590326 & 12.462210 & 11,469921 & 10.59401 & 9.818147 & 9.128546 & 8.513564 & & 6.623131 & & \\ \hline \end{tabular}