Payback, Accounting Rate of Return, Present Value, Net Present Value, Internal Rate of Return For discount factors use Exhibit 128.1 and Exhibit 120.2. All scenarios are independent of all other scenarios. Assume that all cash flows are after-tax cash flows. a. Kambey Day is considering investing in one of the following two projects. Either project will require an investment of $20,000. The expected cash flows for the two projects follow. Assume that each project is depreciable. Project A Project B $6,000 8,000 8,000 Year 1 $6,000 2 3 10,000 10,000 4 3,000 10,000 10,000 5 3,000 b. Wilma Golding is retiring and has the option to take her retirement as a lump sum of 5450,000 or to receive $30,000 per year for 20 years. Wilma's required rate of return is 6% c. David Booth is interested in investing in same tools and equipment so that he can do Independent drywaling. The cost of the tools and equipment is $30,000. He estimates that the return from owning his own equipment will be $9,000 per year. The tools and equipment will last 6 years. d. Patsy Foison is evaluating what appears to be an attractive opportunity. She is currently the owner of a small manufacturing company and has the opportunity to acquire another small company's equipment that would provide production of a part currently purchased externally. She estimates that the savings from internal production will be $75,000 per year. She estimates that the equipment will last 10 years. The owner is asking $400,000 for the equipment. Her company's cost of capital is 896 Required: 1. Conceptual Connection: What is the payback period for each of Kambey Dar's projets? Round your answers to two decimal places Project A years Project B yeon If rapid payback is important, which project should be chosen? Project A 2. Conceptual Connection: Which of Kambry's projects should be chosen based on the ARR? If required, round to the nearest percent Accounting rate of return (ARR): Project A: ARR Project B: ARR Project A 3. Assuming that Wilma Golding will live for another 20 years, should she take the lump sum or the annuity? Wilma should take the lump sum. 4. Assuming a required rate of return of 8% for David Booth, calculate the NPV of the investment. If required, round to the nearest dollar. NPV Should David invest? Yes 5. Calculate the IRR for Patsy Folson's project. Round your answer to the nearest percent. Should Patsy acquire the equipment? Yes Exhibit 128.1 Present Value of a Single Amount 19 25 34 $ 64. 74 94 104 12% 14% 169 20 25% 30% 1 099010 0.980.39 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.89286 0.87219 0.86207 0.746 083333 080000 076923 2_0.98030 0.96117 0.94260 092456 0.90703 0.89000 0.87344 085734 034168 082645 079719 0.76047 0.74316 0.71818 060444 064000 0.59172 3 097059 094232 0.91514 0.68900 0.88354 0.83962 0.81630 0.79383 0.77218 075131 0 71178 067097 0.64066 060861 057700 51200 0.45517 4 0 96095 092335 0.8849 085650 0.82270 0.79209 076290 07350) 0.70841 0.68301 0.63552 a 59205 0.55229 0.51579 0 48225 040960 035013 5 0.95747 0.90573 0.86261 0.82193 0.78351 074726 0.71299 0.68058 0.64993 062092 6 56741 51937 0.47611 0.47711 0.40183 0.12763 026933 6 0.94205 0.88.797 031748 079031 0.74622 070496 0.66614 0.63017 0.59627 0 56447 Sun 0445559 0.4104 037041 0.114000 20214 0.20718 7 093272 0.87056 0.81109 075992 071065 066506 0.62275 0.58349 0.54701 051116 0.45235 0.39964 0.35381 0.11393 0 2790 0.209.72 0.15917 R 0.92348 0.85349 0.78941 071069 0.67654 0.62741 0 58201 0.51027 0.50187 0.46651 0,40388 0.1056 0.30503 0.2660402297 0.16772 0.12259 90.91434 0.81676 0.76642 0.70250 064461 0.59190 054393 0.50025 0.40 0.42410 O 1061 0.10751 0.26295 0.22546 0.19351 0.13422 0.0940 10 0.90529 0.82035 0.74409 0.67556 0.61191 0.55839 0.50835 0.46319 0.42241 0.38554 0.32197 0.20974 022665 0.19106 0.16151 0.10737 0.07254 11 0.89532 0.80426 0.722412 0.64953 0.58468 0.52679 047509 042886 0.38753 035049 0.78748 0.23662 0.19542 0.16192 0.114659 0.08.90 0.05580 12 0.88745 0.78849 0.70138 062460 0.55684 0.49697 0.44401 0.19711 0.35553 0.31863-0.25665 0.20756 0.16845 0.13722 0:11216 0.06872 0.04292 13 0.17566 0.77303 0.68095 0.60057 053032 0.46554 0.41496 0.36770 0.32618 0.28966 022917 0.18207 0.14523 0.11629 0.09346 0.05498 0.03302 14 0.86996 0.75788 0.66112 057748 50507 0.44230 0.38782 0.34046 0.29925026333 0.20462 0.15971 0.12520 0.69855 0.07789 0.04398 0.02540 15 0.86135 0.74301 0.64156 055526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 016270 0.14010 0.10293 0.08352 0.0649) 0.03518 0.01956 16 0.85282 0.72345 062317 053391 0.45811 0.39365 0.33873 0.29189 0.25187 021763 0.15312 0.12289 0,09304 0.07078 0.05409 0.02815 0.01503 17 4438 071415 0.50502 051337 0.43630 037136 0.31 0.27027 0.23107 0.19784 0.14564 0.10780 0,08021 0.05998 0.04507 0.02252 0.01156 18 0.83602 070016 0.58739 049363 0.41552 035034 0.29586 0.25025 0.21199 0.17986 0.13004 0,09456 0.06914 0.05083 0.03756 0.01B01 0.00889 19 0.12774 0.68643 0.57029 0.47464 0.39573 033051 0.27651 0.23171 0.19449 0.16351 0.11611 004205 0.05139 04308 003130 0.01441 0.00684 20 0.81954 067297 055368 0.45639 037689 0.71130 0.25802 0.21455 0.17843 016864010367 0.07276 005179 6.07651 0.07608 0.01157 0.00526 21 0.81143 0.65978 0.53755 0.43883 0.35894 0 29416 024151 0.19866 0.16170 0.13513 0.09256 0.06383 004430 0.03004 0.02176 0.00922 0.00405 22 0.80340 0.64684 0.52189 0.42196 034185 0.27751 0.22571 0.18194 0,15018 0.12285 0.0264 003819 002622 0.01811 00028 0.00111 23 0.79544 0.63416 0.5069 0.40573 032557 0.26750 0.21095 0.17012 0.13778 0.11168 0.07379 0.04911 0.01292 0.02222 0.01509 0.0050 000239 24 0.78757 0.62172 0.40193 0.39012 031007 0.24698 0.19715 0.15770 0.12640 010153 0.06558006308 0.02838 0.01883 001258 0.00472 0.00134 25 0.77977 0.60953 0.47761 0.37512 0.29530 0.23300 0.18425 0.14602 0.11597 0.09230 0.05582 001779 0.02447 0.01596 0.01048 0.00175 0.001 26 0.77205 0 59758 0.46369 0.36060 0.28124 0.21981 0.17220 0.13520 0.10639 008391 0.05252 003315 0.02109 0.01352 0.00874 0,00302 0.00109 27 076440 0.8586 045019 0.34682 0.26785 0.20717 0.16093 0.12519 0.09761 0.07628 0.04689 0.0208 0.01818 0.01146 0.00728 0.00242 0.00084 28 0.75684 0.57437 0.43708 0.33348 025509 0.19563 0 15000 0.11591 0.08955 0.06924 0.04187 0.02551 0.01567 0.00971 0.00607 0.00193 0.00 29 0.74944 0.56111 042435 0.32065 0.24295 0.18456 0.14056 0.10733 0.08215 0.06304 0.03738 0.02237 0.01351 0.00823 0.00506 0.00155 0.00050 30 0.74192 0.55207 0.41199 0.10832 0.23138 0.17411 0.13137 0,09938 0.07537 0.05731 001331 0.01961 0.01165 0.0002 0.00421 0.00124 0.00038 * = A + Exhibit 128.2 Present Value of an Annuity A. 19 SN 7 8% 9% 10% 12 145 16% 18% 205 25% 10 1 0.99010 0.98039 0.97087 0.96156 0.95235 0.94340 093458 0.92593 0.91743 0.90909 0.89286 0.87219 086207 0.847 083333 OBOOOO 0.76921 2 1.97040 194156 1.91347 1.38609 185941 1.83339 1.80802 1.78326 15911 1.73554 1.69005 164646 160523 156564 1.52778 144000 136015 3 2.94099 288388 2.82861 277509 2.72125 2.67301 262432 257710 253129245685 2.40183 212163 224589 217427 21068 1.95200 11611 4 3.90197 3.80773 371710 1.62990 3.54595 1.46511 3.38721 331213 3.29723.16087 309735291371 2.79818 269006 2.55873 2.36160 2.16024 5 4.85343 4.71346 4.57971 4:45182 4.32948 4.21236 4.10020 99271 2589653.79079 3.60478 347308 2129 3.12717 2.99061 268928 2.41557 6 5.79565 5.60143 541719 5.24214 $.02569 491732 476654 4.62288 448592415526 411141 238167 168474 49760 1.32551 2.95142 2.64275 7 6.72819 6.47199 623026 6.00205 5.78637 8.58238 5.38929 $.20637 S 01295468424.56376 428510 0857 181151 760459 3.16114 280211 8 7.65168 712548 7,01969 6.73274 6.46121 6.20979 5.97110 574664 551462533403 4.96764 462886 434759 07757383716 212191 2.92470 9 8.36602 8.16224 7.78611 7:43533 7.10782 6.80169 651523 624689 5.99525 525902 5.12825 404637 460654 40302 40309 3.461 701900 109.47130 8.98250 8.51020 8.11090 7.72171 7.16009 7.02358 671008 6417666.1457 5.68022 321612 483323 44900 4.19247 3.57050 300154 11 10.36761 9.78685 925262 76048 8.30641 7.88687 749867 2.13896 6.80519 649506 593770 54527 5.02864 465601 432706 65640 314734 12 11.25.508 10.57534 9.95400 9.38507 8.86325 8.38384 7.94200 7.508 7.160735.81369 6.1947 029 5.10711 4.79122445932 172512 3.19026 13 12.13374 11.34837 10.61496 9.98565 9.39357 8.85268 835765 7.90378 74660 7.10336 6.42355 5.84216 534233 490951 451265 17010 122128 14 12.00)70 12.10625 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 7.756157.16669662817 6.00207 5.46753 5.00064.61057 352400 124867 15 13.86505 12.84926 11.0170411.11839 10.37966 9.71225 9.10791 8.5504 .060.0 7.60608 6.81036 614217 5.57546 5.00155 467547 5826 126521 16 14.71787 13.57771 12 56110 11.65230 10.81777 10.10590 44665 8851317 8.312567.82171 697199 6.26596 668SO 5.16215 472956 38741 3.28324 17 15 225 1429187 12.1661212.16567 11.27407 10.47726 9.76322 9.12164 854363 802155 7.11963 17236 5.74870 3.22233 477461 1.90993 29480 18 16.39827 14.99203 13.75251 12.65930 11.68959 10.82760 10.05909 9.37189 8.755678.20141 72496.2 6.46745.81785 5.27316 481219 392704 210100 19 17.22601 15.67846 1402380 13.11194 12.05522 11.15812 10.33560 9.60360 X95011816492 736578 650 527746 5.31624 4843 194235 231051 2018.04555 16-35143 14.87747 13.59031 12.46221 11.46992 10.59401 9.81815 0.12855 351356 746044 662311 502884 15275 40 Y938 11579 21 18.85698 17.01121 15.41502 14.02916 12.82115 11.76408 10.33553 10.016809292246489756200 6.6M065.97314 316 419112 106311 131984 22 19.66038 17.65805 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12.22767 11.15841 10.198289,361 802181 698704 616555 550051 497472 199151 1.33168 30 25.8077122.19646 19.60044 17.29203 15 37245 1276483 12.49904 11.25778 10.27365942691 8.05518 700266 617720 5.51681 497894 osos 1.31205 (1/ 7-1/11