PA11-3 (Algo) Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. (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.) Project 1: Retooling Manufacturing Facility This project would require an initial investment of $4,940,000. It would generate $946,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,890,000. Project 2: Purchase Patent for New Product The patent would cost $3715,000, which would be fully amortized over five years. Production of this product would generate $631,550 additional annual net income for Hearne. Project 3: Purchase a New Fleet of Delivery Trucks Hearne could purchase 25 new delivery trucks at a cost of $149.200 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $5,900. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $236,000 of additional net income per year. Required: 1. Determine each project's accounting rate of return 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project. 4. Determine the profitability index of each project and prioritize the projects for Hearne. 1. Determine each project's accounting rate of return. 2. Determine each project's payback period. 3. Using a discount rate of 10 percent calculate the net present value of each project. 4. Determine the profitability index of each project and prioritize the projects for Hearne. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine each project's accounting rate of return. (Round your answers to 2 decimal places.) Accounting Rate of Return Project 1 16.54 Project 2 34.00 % Project 3 12.17 % % Required: 1. Determine each project's accounting rate of return. 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project. 4. Determine the profitability index of each project and prioritize the projects for Hearne. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine each project's payback period. (Round your answers to 2 decimal places.) Project 1 Project 2 Project 3 Payback Period 5.22 years 2.70 years 6.28 years 1. Determine each project's accounting rate of return. 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project. 4. Determine the profitability index of each project and prioritize the projects for Hearne. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculati to 2 decimal places. Round your final answers to 4 decimal places.) Project 1 Project 2 Project 3 Profitability Index Rank 1.2000 2 1.4000 X 1 0.9900 X 3 OO TABLE 11.4A Present Value of Annuity of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 1 0.9804 0.9709 0.9639 09615 0.9592 09524 0.9434 09346 0.9259 2 1.9416 19135 1.8929 1.8861 1.8794 18594 18334 18080 17833 3 2.8839 28286 27883 27751 2.7620 27232 26730 26243 25771 4 3 8077 37171 3.6514 36299 3.6086 3.5460 34651 33872 3.3121 5 47135 4.5797 4.4833 4.4518 4.4207 43295 42124 4100239927 6 5.6014 5.4172 52851 5 2421 5.1997 50757 49173 47665 46229 60579 60021 5.9470 57864 5.5824 53893 52064 7 6.4720 62303 8 73255 70197 6.8028 6.7327 6.6638 6.4632 62098 5.9713 57466 9 81622 77861 75208 74353 73513 71078 6.8017 6.5152 6 2469 10 8.9826 8.5302 8 2128 8.1109 80109 77217 73601 70236 6.7101 16.3514 14.8775 138962 13.5903 13.2944 124622 11.4699 105940 98181 20 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 0.9174 0.9091 0.9009 0.8929 0.8550 0.877208696 0.8333 08000 2 17591 17355 17125 16901 1.6681 16467 16257 15278 14400 3 2.5313 2.4869 2.4437 2.4018 2.3612 2.3216 2.2832 2 1065 19520 4 32397 3.1699 3.1024 3.0373 2.9745 2.9137 2.8550 2.5887 2.3616 5 3.8897 3.7908 36959 3.6048 3.5172 3.4331 3.3522 2.9906 26893 6 4.4859 4,3553 4.2305 4.1114 3.9975 3.8887 3.7845 33255 2.9514 7 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 41604 3.6046 3.1611 8 5.5348 5.3349 51461 4.9676 4.7988 46389 4.4873 3.8372 3.3289 9 5.9952 57590 5.5370 53282 5.1317 4.9464 47716 4.0310 3.4631 10 6.4177 6.1446 5.8892 56502 5.4262 5.2161 5.0188 4.1925 3.5705 20 91285 8.5136 79633 74694 70248 6.6231 6 2593 4.8696 3.9539 TABLE 11.3A Future Value of an Annuity of $1 Periods 2% 3% 3.75% 4% 1.0000 10000 10000 10000 2 20200 20300 20375 20400 4.25% 5% 6% 7% 8% 1 1.0000 10000 10000 10000 1.0000 20425 20500 20600 20700 2.0800 3 3.0604 30909 31139 3.1216 3.1293 3.1525 3.1836 3. 2149 32464 4 4.1216 4.1836 4.2307 4.2465 4.2623 43101 43746 4.4399 4.5061 5 5 2040 5.3091 5.3893 5.4163 5.4434 5.5256 5.6371 5.7507 5.8666 6 6.3061 64684 6.5914 66330 66748 6.8019 6.9753 71533 73359 7 74343 76625 7.8386 78983 79585 8.1420 8.3938 86540 8.9228 8 8.5830 88923 9.8975 102598 10.6366 91326 92142 9.2967 9.5491 10.4750 10.5828 106918 110266 9 9.7546 10.1591 11.4913 11.9780 12.4876 10 10.9497 114639 11.8678 12.0061 12.1462 12.5779 13.1808 13 8164 14.4866 20 24 2974 26.8704 29.0174 297781 30.5625 33,0660 36 7856 40.9955 457620 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 1 1.0000 10000 1.0000 10000 1.0000 1.0000 10000 10000 10000 2 2.0900 2.1000 21100 21200 2.1300 21400 21500 22000 22500 3 3.2781 3.3100 33421 33744 3.4069 3.4725 3.6400 3.8125 3.4396 4.9211 4 4.5731 4.6410 4.7097 4.7793 4.8498 49934 5.3680 57656 5 5.9847 6.1051 62278 6.3528 6.4803 6,6101 67424 74416 82070 6 75233 77156 79129 8.1152 83227 8.5355 87537 112588 9.9299 12.9159 7 9.2004 9.4872 9.7833 100890 10.4047 10.7305 110668 15 0735 19.8419 8 16.4991 110285 114359 11 8594 12 2997 12.7573132328 13.7266 13.0210 13.5975 141640 147757 15.4157 16 0853 167856 9 20.7989 258023 10 151929 15.9374 167220 175487 18.4197 19 3373 20 3037 25.9587 33 2529 20 511601 572750 64 2028 72 0524 80.9468 910249 102 4436 186 6880 342 9447 TABLE 11.2A Present Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 1 0.9804 0.9709 0.9639 0.9615 0.9592 0.9524 0.9434 0.9346 09259 2 3 0.9612 0.9426 0.9290 0.9246 0.9201 0.9070 0.8900 0.8734 0.8573 0.9423 0.9151 0.8954 0.8890 0.8826 0.8638 0.8396 0.8163 07938 0.9238 0.8885 0.8631 0.8548 0.8466 0.8227 0.7921 07629 07350 0.9057 0.8626 0.8319 0.8219 0.8121 07835 0.7473 07130 06806 4 5 6 0.8880 0.8375 0.8018 07903 0.7790 0.7462 0.7050 0.6663 0.6302 7 0.8706 0.8131 07728 0.7599 0.7473 07107 0.6651 06227 0.5835 8 0.8535 0.7894 0.7449 07307 07168 06768 0.6274 0.5820 0.5403 9 08368 0.7664 0.7180 07026 0.6876 0.6446 0.5919 0.5439 0.5002 10 0.8203 0.7441 06920 0.6756 06595 0.6139 0.5584 0.5083 0.4632 20 0.6730 0.5537 0.4789 0.4564 0.4350 03769 0.3118 0.2584 0.2145 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 1 0.9174 0.9091 0.9009 08929 0.8850 0.8772 0.8696 0.8333 0.8000 2 0.8417 0.8264 08116 07972 0.7831 07695 07561 06944 06400 3 0.7722 07513 07312 0.7118 06931 06750 06575 0.5787 0.5120 4 07084 068300658706355 06133 0.5921 05718 0.4823 0.4096 5 06499 06209 0.5935 0.5674 0.5428 0.5194 0.49720401903277 6 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 04323 03349 0.2621 0.5470 0.5132 0.4817 0.4523 04251 0.3996 03759 02791 02097 7 8 0.5019 0.4665 0.4339 0.4039 03762 03506 03269 02326 01678 9 0.4604 0.4241 0.3909 03606 03329 0.3075 02843 01938 01342 10 0.4224 0.3855 03522 03220 0 2946 0 2697 0 2472 01615 0.1074 20 0.1784 0.1486 01240 0.1037 00868 0.0728 00611 0.0261 0.0115 TABLE 11.1A Future Value of $1 Periods 2% 3% 3.75% 45 4.25% 5% 6% 7% 8% 0 10000 10000 10000 10000 10000 10000 10000 10000 1.0000 1 10200 10300 10375 10400 10425 10500 10600 10700 10800 2 10404 1060910764 10816 10868 11025 11236 11449 11664 3 10612 10927 11168 11249 11330 11576 1.1910 12250 12597 4 10824 11255 11587 11699 11811 12155 12625 13108 13605 5 11041 11593 12021 12167 1231312763 13382 14026 14693 6 11262 11941 12472 12653 12837 13401 14185 15007 15869 7 1.1487 12299 12939 13159 13382 14071 15036 16058 17138 8 11717 12668 13425 13686 13951 1.4775 1.5938 17182 18509 9 11951 13048 1392814233 14544 15513 16895 18385 19990 10 12190 13439 4450 14802 15162 16289 17906 19672 21589 20 14859 18061 20882 21911 22989 265333207138697 46610 Periods 0% 11% 12 13% 14% 15% 20% 25% 0 10000 10000 10000 10000 10000 10000 10000 10000 10000 10900 11000 11100 11200 11300 11400 11500 12000 12500 2 11881 12100 12321 12544 12769 12996 13225 14400 15625 3 12950 13310 13676 14049 14429 14815 15209 17280 19531 1.4116 14641 15181 1.5735 16305 16890 17490 20736 24414 5 15386 16105 16851 17623 18424 19254 2.4883 3.0518 10% 1 2014 6 7 16771 17716 18704 19738 20820 2.1950 23131 2.9860 3.8147 18280 19487 20762 22107 23526 25023 26600 3.5832 47684 19926 21436 23045 2.4760 26584 28526 3.0590 4.2998 5.9605 8 5.1598 74506 2.1719 23579 2.5580 27731 30040 32519 3.5179 23674 25937 28394 31058 33946 3707240456 10 6.1917 93132 20 56044 67275 80623 96463115231 13.743516 366538 3376 86 7362