Merrill Corp. has the following information available about a potential capital investment: Initial investment Annual net income Expected life Salvage value Merrill's cost of capital $1,000,000 $ 100,000 8 years $ 110,000 7% Assume straight line depreciation method is used. Required: 1. Calculate the project's net present value. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net Present Value 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 7 percent. O Less than 7 Percent O Greater than 7 Percent 3. Calculate the net present value using a 14 percent discount rate (Euture Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net Present Value 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 14 percent More than 14 percent Less than 14 percent Equal to 14 percent TABLE 11.1A Future Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 0 1 2 3 4 5 6 7 8 9 10 20 1.0000 1.0200 1.0404 1.0612 1.0824 1.1041 1.1262 1.1487 1.1717 1.1951 1.2190 1.4859 1.0000 1.0300 1.0609 1.0927 1.1255 1.1593 1.1941 1.2299 1.2668 1.3048 1.3439 1.8061 1.0000 1.0375 1.0764 1.1168 1.1587 1.2021 1.2472 1.2939 1.3425 1.3928 1.4450 2.0882 1.0000 1.0400 1.0816 1.1249 1.1699 1.2167 1.2653 1.3159 1.3686 1.4233 1.4802 2.1911 1.0000 1.0425 1.0868 1.1330 1.1811 1.2313 1.2837 1.3382 1.3951 1.4544 1.5162 2.2989 1.0000 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 1.6289 2.6533 1.0000 1.0600 1.1236 1.1910 1.2625 1.3382 1.4185 1.5036 1.5938 1.6895 1.7906 3.2071 1.0000 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 3.8697 1.0000 1.0800 1.1664 1.2597 1.3605 1.4693 1.5869 1.7138 1.8509 1.9990 2.1589 4.6610 Periods 10% 11% 12% 13% 14% 15% 20% 25% 0 1 2 3 4 5 6 7 8 9 10 20 9% 1.0000 1.0900 1.1881 1.2950 1.4116 1.5386 1.6771 1.8280 1.9926 2.1719 2.3674 5.6044 1.0000 1.1000 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 2.1436 2.3579 2.5937 6.7275 1.0000 1.1100 1.2321 1.3676 1.5181 1.6851 1.8704 2.0762 2.3045 2.5580 2.8394 8.0623 1.0000 1.1200 1.2544 1.4049 1.5735 1.7623 1.9738 2.2107 2.4760 2.7731 1.0000 1.1300 1.2769 1.4429 1.6305 1.8424 2.0820 2.3526 2.6584 3.0040 3.3946 11.5231 1.0000 1.1400 1.2996 1.4815 1.6890 1.9254 2. 1950 2.5023 2.8526 3.2519 3.7072 13.7435 1.0000 1.1500 1.3225 1.5209 1.7490 2.0114 2.3131 26600 3.0590 3.5179 4.0456 16.3665 1.0000 1.2000 1.4400 1.7280 2.0736 2.4883 2.9860 3.5832 4.2998 5.1598 6.1917 38.3376 1.0000 1.2500 1.5625 1.9531 2.4414 3.0518 3.8147 4.7684 5.9605 7.4506 9.3132 86.7362 3.1058 9.6463 TABLE 11.2A Present Value of $1 Periods 2% 3% 4% 4.25% 5% 6% 7% 8% 1 2 3 4 5 6 7 8 9 10 20 0.9804 0.9612 0.9423 0.9238 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.6730 0.9709 0.9426 0.9151 0.8885 0.8626 0.8375 0.8131 0.7894 0.7664 0.7441 0.5537 3.75% 0.9639 0.9290 0.8954 0.8631 0.8319 0.8018 0.7728 0.7449 0.7180 0.6920 0.4789 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 0.4564 0.9592 0.9201 0.8826 0.8466 0.8121 0.7790 0.7473 0.7168 0.6876 0.6595 0.4350 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.3769 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 0.3118 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 0.2584 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.2145 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 2 3 4 5 6 7 8 9 10 20 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.4224 0.1784 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.1486 0.9009 0.8116 0.7312 0.6587 0.5935 0.5346 0.4817 0.4339 0.3909 0.3522 0.1240 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.1037 0.8850 0.7831 0.6931 0.6133 0.5428 0.4803 0.4251 0.3762 0,3329 0.2946 0.0868 0.8772 0.7695 0.6750 0.5921 0.5194 0.4556 0.3996 0.3506 0.3075 0.2697 0.0728 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.0611 0.8333 0.6944 0.5787 0.4823 0.4019 0.3349 0.2791 0.2326 0.1938 0.1615 0.0261 0.8000 0.6400 0.5120 0.4096 0.3277 0.2621 0.2097 0.1678 0.1342 0.1074 0.0115 TABLE 11.3A Future Value of an Annuity of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 2 3 4 5 6 7 8 9 10 20 1.0000 2.0200 3.0604 4.1216 5.2040 6.3061 7.4343 8.5830 9.7546 10.9497 24.2974 9% 1.0000 2.0300 3.0909 4.1836 5.3091 6.4684 7.6625 8.8923 10.1591 11.4639 26.8704 10% 1.0000 2.0375 3.1139 4.2307 5.3893 6.5914 7.8386 9.1326 10.4750 11.8678 29.0174 11% 1.0000 2.0400 3.1216 4.2465 5.4163 6.6330 7.8983 9.2142 10.5828 12.0061 29.7781 12% 1.0000 20425 3.1293 4.2623 5.4434 6.6748 7.9585 9.2967 10.6918 12.1462 30.5625 1.0000 20500 3.1525 4.3101 5.5256 6.8019 8.1420 9.5491 11.0266 12.5779 33.0660 1.0000 2.0600 3.1836 4.3746 5.6371 6.9753 8.3938 9.8975 11.4913 13.1808 36.7856 15% 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 40.9955 20% 1.0000 20800 3.2464 4.5061 5.8666 7.3359 8.9228 10.6366 12.4876 14.4866 45.7620 25% Periods 13% 14% 1 2 3 4 5 6 7 8 9 10 1.0000 2.0900 3.2781 4.5731 5.9847 7.5233 9.2004 11.0285 13.0210 15.1929 51.1601 1.0000 2.1000 3.3100 4.6410 6.1051 7.7156 9.4872 11.4359 13.5975 15.9374 57 2750 1.0000 2.1100 3.3421 4.7097 6.2278 7.9129 9.7833 11.8594 14.1640 167220 64.2028 1.0000 2.1200 3.3744 4.7793 6.3528 8.1152 10.0890 12.2997 14.7757 17.5487 72.0524 1.0000 2.1300 3.4069 4.8498 6.4803 8.3227 10.4047 12.7573 15.4157 18.4197 80.9468 1.0000 2.1400 3.4396 4.9211 6,6101 8.5355 10.7305 13 2328 16.0853 19.3373 91.0249 1.0000 2.1500 3.4725 4.9934 6.7424 8.7537 11.0668 13.7266 167856 20.3037 102.4436 1.0000 2.2000 3.6400 5.3680 7.4416 9.9299 12.9159 16.4991 20.7989 25.9587 186.6880 1.0000 2.2500 3.8125 5.7656 8.2070 11.2588 15.0735 19.8419 25.8023 33.2529 342 9447 20 There is one payment each period. TABLE 11.4A Present Value of Annuity of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 2 3 4 5 6 7 8 9 10 20 0.9804 1.9416 2.8839 3.8077 4.7135 5.6014 6.4720 7.3255 8.1622 8.9826 16.3514 0.9709 1.9135 2.8286 3.7171 4.5797 5.4172 6.2303 7.0197 7.7861 8.5302 14.8775 0.9639 1.8929 2.7883 3.6514 4.4833 5.2851 6.0579 6.8028 7.5208 8.2128 13.8962 0.9615 1.8861 2.7751 3.6299 4.4518 5.2421 6.0021 6.7327 7.4353 8.1109 13.5903 0.9592 1.8794 2.7620 3.6086 4.4207 5.1997 5.9470 6.6638 7.3513 8.0109 13.2944 0.9524 1.8594 2.7232 3.5460 4.3295 5.0757 5.7864 6.4632 7.1078 7.7217 12.4622 0.9434 1.8334 2.6730 3.4651 4.2124 4.9173 5.5824 6.2098 6.8017 7.3601 11.4699 0.9346 1.8080 2.6243 3.3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 10.5940 0.9259 1.7833 2.5771 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 6.7101 9.8181 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 1 2 3 4 5 6 0.9174 1.7591 2.5313 3.2397 3.8897 4.4859 5.0330 5.5348 5.9952 6.4177 9.1285 0.9091 1.7355 2.4869 3.1699 3.7908 4.3553 4.8684 5.3349 5.7590 6.1446 8.5136 0.9009 1.7125 2.4437 3.1024 3.6959 4.2305 4.7122 5.1461 5.5370 5.8892 7.9633 0.8929 1.6901 2.4018 3.0373 3.6048 4.1114 4.5638 4.9676 5.3282 5.6502 7.4694 0.8550 1.6681 2.3612 2.9745 3.5172 3.9975 4.4226 4.7988 5.1317 5.4262 7.0248 0.8772 1.6467 2.3216 2.9137 3.4331 3.8887 4.2883 4.6389 4.9464 5.2161 6.6231 0.8696 1.6257 2.2832 2.8550 3.3522 3.7845 4.1604 4.4873 4.7716 5.0188 6.2593 0.8333 1.5278 2.1065 2.5887 2.9906 3.3255 3.6046 3.8372 4.0310 4.1925 4.8696 0.8000 1.4400 1.9520 2.3616 2.6893 2.9514 3.1611 3.3289 3.4631 3.5705 3.9539 8 9 10 20 * There is one payment each period