PART 1:

You buy a new piece of equipment for $27,176, and you receive a cash inflow of $3,600 per year for 17 years. Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method.

What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

PART 2:

The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $66,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year	Cash Flow
1	$	31,000
2		36,000
3		33,000
4		26,000
5		12,000

a. If the cost of capital is 13 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

1 (1+1) Appendix D Present value of an annuity of $1, PVA PV-A Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 1% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 14.718 15.562 16.398 17.226 18.046 22.023 25.808 32.835 39.196 2% 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.67 16.351 19.523 22.396 27.355 31.424 3% 0.971 1.913 2829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17.413 19.600 23.115 25.730 4% 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 15.622 17.292 19.793 21.482 5% 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.100 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 14.094 15.372 17.159 18.256 Percent 6% 7% 0.943 0.935 1.833 1.808 2.673 2.624 3.465 3.387 4.212 4.100 4.917 4.767 5.582 5.389 6.210 5.971 6.802 6.515 7.360 7.024 7.887 7.499 8.384 7.943 8.853 8.358 9.295 8.745 9.712 9.108 10.106 9.447 10.477 9.763 10.828 10.059 11.158 10.336 11.470 10.594 12.783 11.654 13.765 12.409 15.046 13.332 15.762 13.801 8% 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 10.675 11.258 11.925 12.233 9% 0.917 1.759 2.531 3.240 3.890 4.486 5,033 5.535 5.996 6.418 6.805 7.161 7.487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 9.823 10.274 10.757 10.962 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 6.814 7.103 7.367 7.606 7.824 8.022 8.201 8.365 8.514 9.077 11% 0.901 1.713 2.444 3.102 3.696 4.231 4.712 5.146 5.537 5.889 6.207 6.492 6.750 6.982 7.191 7.379 7.549 7.702 7.839 7.963 8.422 8.694 8.951 9.042 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.843 8.055 8.244 8.304 9.427 9.779 9.915 Appendix D (concluded) 25% Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 ............... 13% 0.885 1.668 2.361 2.974 3.517 3.998 4.423 4.799 5.132 5.426 5.687 5.918 6.122 6.302 6.462 6.604 6.729 6.840 6.938 7.025 7.330 7.496 7.634 7.675 14% 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 4.946 5.216 5.453 5.860 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.873 7.003 7.105 7.133 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.198 6.259 6.464 6.566 6.642 6.661 16% 0.862 1.605 2.246 2.798 3.274 3.685 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 5.575 5.668 5.749 5.818 5.877 5.929 6.097 6.177 6.233 6.246 17% 0.855 1.585 2210 2.743 3.199 3.589 3.922 4.207 4.451 4.659 4.836 4.988 5.118 5.229 5.324 5.405 5.475 5.534 5.584 5.628 5.766 5.829 5.871 5.880 18% 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5.008 5.092 5.162 5.222 5.273 5.316 5.353 5.467 5.517 5.548 5.554 Percent 19% 0.840 1.547 2.140 2.639 3.058 3.410 3.706 3.954 4.163 4.339 4.486 4.611 4.715 4.802 4.876 4.938 4.988 5.033 5.070 5.101 5.195 5.235 5.258 5.262 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.843 4.870 4.948 4.979 4.997 4.999 0.800 1.440 1.952 2.362 2.689 2.951 3.161 3.329 3.463 3.571 3.656 3.725 3.780 3.824 3.859 3.887 3.910 3.928 3.942 3.954 3.985 3.995 3.999 4.000 30% 0.769 1.361 1.816 2.166 2.436 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.283 3.295 3.304 3.311 3.316 3.329 3.332 3.333 3.333 35% 0.741 1.289 1.696 1.997 2.220 2.385 2.508 2.598 2.665 2.715 2.752 2.779 2.799 2.814 2.825 2.834 2.840 2.844 2.848 2.850 2.856 2.857 2.857 2.857 40% 0.714 1.224 1.589 1.849 2.035 2.168 2.263 2331 2.379 2.414 2.438 2.456 2.469 2.478 2.484 2.489 2.492 2.494 2.496 2.497 2.499 2.500 2.500 2.500 50% 0.667 1.111 1.407 1.605 1.737 1.824 1.883 1.922 1.948 1.965 1.977 1.985 1.990 1.993 1.995 1.997 1.998 1.999 1.999 1.999 2.000 2.000 2.000 2.000 Appendix B Present value of $1, PVF PV=FvD 17 1+i)" Percent 1% 2% 3% 4% 5% 6% 7% 8% 9% 11% 12% Period 1 2 10% 0.909 0.952 0.943 0.990 0.980 0.971 0.971 0.943 0.915 0.962 0.925 0.890 0.907 0.864 0.980 0.961 0.942 0.924 0.906 0.888 0.917 0.842 0.772 0.708 0.889 0.893 0.797 0.712 0.636 3 4 0.926 0.857 0.794 0.735 0.681 0.961 0.888 0.823 0.855 0.822 5 0.951 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.863 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.784 0.567 6 0.746 0.630 0.942 0.933 0.507 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.837 0.813 0.790 0.760 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.650 0.596 0.547 0.502 7 0.871 0.711 0.583 0.452 0.853 0.731 0.677 0.540 0.404 8 9 0.789 0.766 0.837 0.703 0.645 0.460 0.391 0.923 0.914 0.905 0.896 0.500 0.463 10 0.744 0.676 0.614 0.508 0.422 0.352 0.820 0.804 0.361 0.322 0.287 0.722 0.650 0.585 0.475 0.429 0.388 0.350 0.317 11 12 0.788 0.701 0.625 0.557 0.527 0.497 0.469 0.444 0.397 0.356 0.319 0.887 0.879 0.257 0.286 0.258 13 0.681 0.601 0.530 0.415 0.368 0.290 0.229 0.773 0.758 0.326 0.299 14 0.870 0.661 0.577 0.505 0.442 0.340 0.263 0.232 0.205 0.388 0.362 15 0.861 0.642 0.555 0.417 0.315 0.275 0.239 0.209 0.743 0.728 0.481 0.458 0.183 0.163 16 0.853 0.623 0.534 0.339 0.292 0.252 0.218 0.394 0.371 0.188 0.170 17 0.844 0.605 0.513 0.436 0.270 0.231 0.198 0.146 0.317 0.296 18 0.714 0.700 0.686 0.836 0.587 0.212 0.180 0.153 0.828 0.250 0.232 0.570 0.494 0.475 0.456 0.350 0.331 0.312 19 20 0.164 0.138 0.416 0.396 0.377 0.295 0.277 0.258 0.194 0.178 0.673 0.215 0.149 0.124 0.554 0.478 25 0.610 0.375 0.233 0.184 0.146 0.092 0.074 0.820 0.780 0.742 0.672 0.116 0.075 0.130 0.116 0.104 0.059 0.033 0.011 0.003 30 0.131 0.099 0.552 0.453 0.412 0.307 0.228 0.308 0.208 0.141 0.231 0.142 0.087 0.174 0.097 40 0.057 0.022 0.044 0.015 0.032 0.067 0.034 0.046 0.021 50 0.608 0.372 0.054 0.013 0.009 0.005 Appendix B (concluded) Present value of $1 Percent Period 13% 14% 15M 16% 18% 19% 20% 40" 50M 35M 0:741 1 0,885 0.877 0.862 0.847 0.840 0,706 0.870 0756 0.658 25% 0.800 0.640 0.512 30% 0769 0.592 0783 0769 0833 0.694 0.579 0:743 0.718 0.549 0.714 0:510 0364 0:260 0.675 0.641 0.609 0.593 2 3 4 5 0406 0.693 0.613 0,455 0.350 0572 0:499 0482 0.410 0:592 0:519 0:552 0476 0515 0:437 0.301 0223 0.667 0,444 0:296 0.198 0.132 0.088 0.059 0543 0.497 0.419 0:402 6 0480 0:456 0:410 0.370 0:352 0.335 0432 0376 0.328 0.262 0:210 0,269 0.207 0.159 0.123 0. 165 0. 122 0.186 0. 133 0.095 0425 0:314 0279 7 8 9 0400 0:351 0266 0.354 0:305 0263 0.376 0333 0:295 0:233 0:296 0249 0.209 0327 0284 0.168 0.068 0.048 0225 0.194 0.308 0:270 0:237 0.134 0.107 0.091 0.067 0.050 0.037 10 0.039 0026 0017 0:227 0:191 0.094 0.073 0.056 0.162 0.176 0. 148 0.035 0.025 11 0,261 0:135 0247 0:215 0.187 0. 163 0. 162 0.137 0.012 0.008 12 0:231 17% 0.855 0:731 0.624 0.534 0:456 0.390 0.333 0.285 0.243 0.208 0. 178 0.152 0. 130 0.111 0.095 0:081 0.069 0.059 0.051 0.043 0.020 0.009 0.002 0 0.208 0.124 0.086 0.069 0.055 0044 13 0.204 0.182 0.116 0.112 0.093 0:078 0.104 0.043 0.033 0.025 0.027 0:020 0.015 0.018 0.013 0.009 14 0.099 0.181 0. 160 0.141 0. 123 15 0.084 0:020 0088 0.074 0.062 0011 0.160 0.140 0.123 0.108 0.006 0. 195 0.168 0.145 0.125 0.108 0:093 0.080 0.069 0.060 0.051 0:024 0.035 0028 16 0.005 0.003 0.002 0.002 0.001 0.065 0.054 0:045 0.141 0.125 0.107 0:093 0.015 17 0.012 0.009 18 0,095 0.052 0.044 0.037 0.111 0.098 0.005 0.003 0.002 0.002 0.081 0:070 0001 0023 0.018 0:014 0071 0.060 0.051 0.043 0.037 0.016 0.007 0.038 0:031 0.008 0.006 0.005 0.003 0.002 0:001 19 20 0.083 0.073 0.038 0:020 0005 0.087 0.047 0:001 0.007 0.005 0.001 0.061 0.030 0015 0.012 0.004 25 0026 0.010 0.004 0.031 0.013 0.005 0:001 0001 0 30 40 50 0.026 0.008 0.012 0.003 0.004 0:001 0001 0 0 0.002 0.001 0.001 0.001 0 0 0 0