Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $133,000. Project 2 requires an initial investment of $99,900. Assume the company requires a 10% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project 1 $ 108,000 Project 2 $ 85,000 Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income 72,150 19,000 8,880 $ 7,970 35,520 19,980 22,200 $ 7,300 Compute the net present value of each potential investment. Use 7 years for Project 1 and 5 years for Project 2. Assume cash flows occur evenly throughout each year. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Project 1 Chart values are based on: n = i = 7 10% Amount Select Chart Present Value of an Annuity of 1 PV Factor 4.8684 = Present Value $ 0 Present value of cash inflows Initial investment Net present value 133,000 Project 2 Chart values are based on: n = 5 = 10% Amount Select Chart Present Value of an Annuity of 1 PV Factor 3.7908 = Present Value $ 0 Present value of cash inflows Initial investment Net present value 99,900 Table B.1* Present Value of 1 p=1/(1+i)" Rate Periods 1% 2% 3% 4% 5% 6% 9% 10% 12% 15% Periods 7% 0.9346 8% 0.9259 1 0.9901 0.9804 0.9615 0.9524 0.9174 0.8929 10 0.8696 1 0.9709 0.9426 0.9434 0.8900 0.9091 0.8264 2 0.9803 0.9612 0.9246 0.9070 0.8734 0.8417 0.7972 0.7561 2 0.8573 0.7938 3 0.9706 0.9423 0.9151 0.8890 0.8638 NA 0.8396 0.8163 0.7722 0.7513 0.7118 0.6575 3 NA 4 0.9610 0.9238 0.8885 0.8548 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 4 0.7921 0.7473 5 0.9057 0.8626 0.8227 0.7835 0.7462 0.7130 0.6806 0.6499 0.6209 0.5674 0.9515 0.9420 5 0.8219 0.7903 0.4972 0.4323 6 0.8880 0.8375 0.7050 0.5963 0.5645 0.5066 6 0.6663 0.6227 0.6302 0.5835 7 0.9327 0.8706 0.8131 0.7599 0.6651 0.5470 0.5132 0.4523 0.3759 7 0.7107 0.6768 8 0.8535 0.7307 0.6274 0.5019 0.4665 0.4039 8 0.9235 0.9143 0.7894 0.7664 0.5820 0.5439 0.5403 0.5002 0.3269 0.2843 9 0.8368 0.7026 0.6446 0.4604 0.3606 9 0.5919 0.5584 0.4241 0.3855 10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5083 0.4632 0.4224 0.3220 0.2472 10 11 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 11 12 0.8874 0.6246 0.5568 0.4970 0.4440 0.3186 0.2567 12 0.7014 0.6810 TT 0.7885 0.7730 0.7579 0.3971 0.3677 0.3555 0.3262 0.1869 0.1625 13 0.8787 0.6006 0.2897 0.2292 13 14 0.8700 0.6611 0.5775 0.5303 0.5051 0.4810 0.4150 0.3878 0.3624 0.3405 0.2992 0.2633 0.1413 0.4688 0.4423 0.4173 0.3936 14 0.2046 0.1827 15 0.8613 0.7430 0.6419 0.5553 0.2745 0.1229 15 0.3152 0.2919 16 0.8528 0.7284 0.6232 0.5339 0.3387 0.2519 0.2394 0.2176 0.1978 0.1631 0.1069 0.4581 0.4363 16 17 0.8444 0.6050 0.5134 0.3714 0.3166 0.2703 0.2311 0.1456 0.0929 17 0.7142 0.7002 18 0.4936 0.4155 0.3503 0.2959 0.2502 0.1799 0.0808 18 0.8360 0.8277 0.8195 0.2120 0.1945 19 0.5874 0.5703 0.5537 0.1300 0.1161 0.6864 0.4746 0.3305 0.2765 0.2317 0.0703 19 0.3957 0.3769 0.1635 0.1486 20 0.6730 0.4564 0.3118 0.2145 0.1784 0.1037 0.0611 20 0.2584 0.1842 25 0.6095 0.3751 0.2330 0.1460 0.1160 0.0923 0.0588 0.0304 25 0.7798 0.7419 0.4776 0.4120 30 0.5521 0.3083 0.0994 0.0754 0.0573 0.0334 0.0151 30 0.2953 0.2314 0.1813 0.1420 0.1741 0.1301 35 0.0676 0.0490 0.0356 0.1314 0.0937 0.0668 0.0189 0.7059 0.6717 35 0.5000 0.4529 0.3554 0.3066 0.2534 0.2083 0.0075 0.0037 40 0.0972 0.0460 0.0318 0.0221 0.0107 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). Table B.2 Future Value of 1 f=(1+) 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 1.0000 1.0000 1.0000 0 1 1.0100 1.0200 1.0300 1.0400 1.0600 1.0700 1.0800 1.0900 1.1000 1.1200 1.1500 1 2 1.0201 1.0404 1.0609 1.0816 1.1236 1.1449 1.1664 1.1881 1.2100 1.2544 1.3225 2 3 1.0303 1.0612 1.0927 1.1249 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 3 4 1.5209 1.7490 1.0406 1.0824 |||| 1.1255 1.2625 1.3605 1.4116 1.1699 1.2167 4 1.3108 1.4026 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 5 1.5735 1.7623 1.0510 1.1041 1.1593 1.3382 1.4693 1.4641 1.6105 1.7716 1.5386 2.0114 5 6 1.0615 1.1262 1.1941 1.2653 1.4185 1.5007 1.5869 1.6771 1.9738 2.3131 6 7 1.0721 1.1487 1.2299 1.3159 1.5036 1.7138 1.8280 1.9487 2.6600 7 1.6058 1.7182 8 1.0829 1.1717 1.2668 1.3686 1.5938 1.8509 2.1436 1.9926 2.1719 8 2.2107 2.4760 2.7731 . 3.0590 3.5179 9 1.0937 1.1951 1.3048 1.4233 1.6895 1.8385 1.9990 9 2.3579 2.5937 10 1.1046 1.2190 1.3439 1.4802 1.6289 1.7908 1.9672 2.3674 3.1058 4.0456 10 2.1589 2.3316 | 11 1.1157 1.2434 1.3842 1.5395 1.7103 1.8983 2.1049 TTTT 2.5804 2.8531 3.4785 11 12 1.1268 1.2682 1.4258 1.7959 2.0122 2.5182 2.8127 12 4.6524 5.3503 6.1528 3.8960 4.3635 T 13 1.1381 1.6010 1.6651 1.7317 1.8856 2.1329 2.2522 2.4098 2.5785 1.2936 1.3195 3.0658 1.4685 1.5126 13 2.7196 2.9372 3.1384 3.4523 3.7975 4.1772 14 1.1495 1.9799 2.2609 3.3417 4.8871 7.0757 14 15 1.1610 1.3459 1.5580 1.8009 2.3966 2.7590 3.1722 3.6425 8.1371 15 2.0789 2.1829 5.4736 6.1304 16 1.1726 1.3728 1.6047 1.8730 2.5404 2.9522 3.4259 TT 3.9703 4.5950 9.3576 16 17 1.1843 1.4002 1.6528 1.9479 2.2920 3.1588 3.7000 4.3276 5.0545 6.8660 10.7613 17 2.6928 2.8543 18 1.4282 1.7024 2.0258 3.3799 3.9960 5.5599 7.6900 18 1.1961 1.2081 4.7171 5.1417 12.3755 14.2318 19 1.4568 1.7535 2.1068 3.0256 3.6165 4.3157 8.6128 19 | 2.4066 2.5270 2.6533 3.3864 6.1159 6.7275 20 1.2202 1.4859 1.8061 3.2071 3.8697 4.6610 5.6044 9.6463 16.3665 20 2.1911 2.6658 25 1.2824 1.6406 2.0938 5.4274 6.8485 8.6231 17.0001 32.9190 4.2919 5.7435 30 1.3478 1.8114 2.4273 3.2434 7.6123 10.0627 13.2677 29.9599 ||* 4.3219 5.5160 "TT"" 10.8347 17.4494 28.1024 [ *] [ 25 30 35 66.2118 133.1755 35 1.4166 1.9999 2.8139 3.9461 7.6861 1 10.6766 14.7853 20.4140 52.7996 40 1.4889 2.2080 3.2620 4.8010 .. 7.0400 10.2857 14.9745 21.7245 31.4094 45.2593 93.0510 267.8635 40 fused to compute the future value of a known present amount For example: What is the accumulated value of $3.000 invested today at 80% compounded quarterly for 5 years? Using the factors of n = 20 and Table B.3fPresent 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 ] 0 1 0.9901 0.9804 0.9709 0.9615 0.9434 || | 0.8929 0.8696 | 0.9524 1.8594 2 IL 1.9704 | 0.9091 1.7355 1.9416 1 2 1.9135 0.9346 1.8080 2.6243 1.8861 0.9259 1.7833 2.5771 1.8334 0.9174 1.7591 2.5313 1.6257 1.6901 2.4018 3 2.9410 2.8839 2.7751 2.7232 2.6730 2.4869 2.2832 3 2.8286 3.7171 4 3.9020 3.8077 3.6299 3.5460 3.3872 3.3121 3.2397 2.8550 4 5 4.8534 3.0373 3.6048 4.7135 4.5797 4.4518 3.4651 4.2124 4.9173 4.3295 3.9927 ||||| 3.1699 3.7908 4.3553 4.1002 4.7665 3.3522 5 3.8897 4.4859 6 5.7955 5.6014 5.4172 5.2421 5.0757 4.6229 4.1114 3.7845 6 7 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.2064 5.0330 4.8684 4.5638 4.1604 7 8 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.3893 5.9713 6.5152 5.7466 5.5348 4.9676 8 5.3349 5.7590 4.4873 4.7716 9 7.4353 7.1078 6.8017 6.2469 5.9952 5.3282 9 8.5660 9.4713 10.3676 8.1622 8.9826 7.7861 8.5302 10 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 10 11 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 5.9377 5.2337 11 12 11.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.1944 5.4206 12 13 12.1337 11.3484 10.6350 9.9856 9.3936 7.9038 7.4869 5.5831 6.8137 7.1034 7.3667 8.8527 9.2950 13 8.3577 8.7455 6.4235 6.6282 14 13.0037 12.1062 11.2961 9.8986 8.2442 7.7862 5.7245 14 15 13.8651 9.1079 8.5595 7.6061 6.8109 5.8474 15 12.8493 13.5777 10.5631 11.1184 11.6523 12.1657 10.3797 10.8378 9.7122 10.1059 8.0607 8.3126 16 14.7179 9.4466 8.8514 7.8237 6.9740 5.9542 11.9379 12.5611 13.1661 13.7535 16 17 15.5623 14.2919 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 17 18 ITIT 16.3983 14.9920 12.6593 11.6896 10.0591 9.3719 8.7556 6.1280 18 8.2014 8.3649 7.2497 7.3658 19 17.2260 14.3238 13.1339 12.0853 ololololololul 10.3356 8.9501 6.1982 15.6785 16.3514 19 10.8276 11.1581 11.4699 12.7834 9.6036 9.8181 20 18.0456 14.8775 13.5903 12.4622 10.5940 9.1285 8.5136 7.4694 6.2593 20 25 19.5235 17.4131 15.6221 14.0939 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25 22.0232 25.8077 30 19.6004 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 30 17.2920 18.6646 35 22.3965 24.9986 27.3555 11.6546 15.3725 16.3742 17.1591 8.1755 29.4086 32.8347 6.6166 35 21.4872 23.1148 14.4982 15.0463 12.9477 13.3317 10.5668 10.7574 9.6442 9.7791 40 19.7928 11.9246 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 PVfactor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177). Table B.4$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 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 2.1500 2 3 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 3.4725 3 4 4.1216 4.1836 4.3101 4.3746 4.4399 4.5061 4.6410 4.7793 4.9934 4 4.0604 5.1010 6.1520 4.2465 5.4163 5 4.5731 5.9847 5.2040 5.3091 5.5256 5.6371 5.7507 5.8666 6.3528 6.7424 5 6 6.3081 6.4684 6.6330 6.8019 lalu 6.9753 7.1533 7.3359 7.5233 8.1152 8.7537 6 6.1051 7.7156 9.4872 11.4359 7 7.2135 7.4343 7.6625 8.3938 8.6540 8.9228 10.0890 7 7.8983 9.2142 9.2004 11.0285 11.0668 13.7268 8 8.2857 8.1420 9.5491 11.0266 8.5830 9.8975 10.2598 10.6366 12.2997 8.8923 10.1591 8 9 9.3685 9.7546 10.5828 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 9 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 14.4866 15.1929 15.9374 17.5487 20.3037 10 13.8164 15.7836 11 11.5668 12.8078 13.4864 14.9716 16.6455 17.5603 24.3493 11 12.1687 13.4121 14.2068 15.9171 18.5312 21.3843 20.6546 24.1331 12 12.6825 14.1920 15.0258 16.8699 18.9771 20.1407 29.0017 12 17.8885 20.1406 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 21.4953 22.9534 28.0291 34.3519 13 24.5227 27.9750 14 14.9474 15.9739 17.0863 18.2919 24.2149 26.0192 32.3926 40.5047 14 21.0151 23.2760 22.5505 25.1290 15 16.0969 17.2934 18.5989 19.5986 21.5786 23.6575 27.1521 29.3609 31.7725 47.5804 20.0236 21.8245 15 37.2797 42.7533 16 17.2579 18.6393 20.1569 25.6725 27.8881 30.3243 33.0034 55.7175 16 35.9497 40.5447 17 18.4304 20.0121 23.6975 25.8404 28.2129 65.0751 17 30.8402 33.9990 33.7502 37.4502 36.9737 41.3013 48.8837 55.7497 18 19.6147 21.4123 25.6454 28.1324 30.9057 75.8364 18 21.7616 23.4144 25.1169 26.8704 45.5992 51.1591 19 20.8109 22.8406 27.6712 30.5390 33.7600 37.3790 46.0185 63.4397 88.2118 19 20 22.0190 24.2974 29.7781 36.7856 40.9955 57.2750 20 33.0660 47.7271 51.1601 84.7009 25 28.2432 41.6459 54.8645 32.0303 40.5681 25 41.4463 45.7620 73.1059 113.2832 172.3168 36.4593 47.5754 63.2490 94.4608 98.3471 164.4940 30 34.7849 56.0849 79.0582 136.3075 72.0524 102.4436 133.3339 212.7930 241.3327 434.7451 431.6635 881.1702 767.0914 1,779.0903 66.4388 90.3203 30 35 41.6603 49.9945 60.4621 73.6522 111.4348 138.2369 215.7108 35 271.0244 442.5926 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 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 7.3359)