Present value of $1

Periods 4% 6% 8% 10% 12% 14%

1 0.962 0.943 0.926 0.909 0.893 0.877

2 0.925 0.890 0.857 0.826 0.797 0.769

3 0.889 0.840 0.794 0.751 0.712 0.675

4 0.855 0.792 0.735 0.683 0.636 0.592

5 0.822 0.747 0.681 0.621 0.567 0.519

6 0.790 0.705 0.630 0.564 0.507 0.456

7 0.760 0.665 0.583 0.513 0.452 0.400

8 0.731 0.627 0.540 0.467 0.404 0.351

9 0.703 0.592 0.500 0.424 0.361 0.308

10 0.676 0.558 0.463 0.386 0.322 0.270

10. Jimmy Reynolds is considering investing $12,000 in a project with the following cash revenues and expenses:

Revenues Expenses

Year 1 $20,000 $18,000

Year 2 $22,000 $19,000

Year 3 $22,000 $20,000

Year 4 $22,000 $17,000

Year 5 $25,000 $17,000

Jimmy requires a minimum rate of return of 8%.

A. Calculate the net cash inflows in each of the 5 years.

B. What is the payback period?

C. What is the net present value of the investment? (Use table above)

Present value of $1 Periods 4% 6% 1 0.962 0.943 2 0.925 0.890 3 10.889 0.840 4 0.855 0.792 15 0.822 0.747 16 0.790 0.705 7 0.760 10.665 8 0.731 0.627 19 10.703 0.592 0.676 0.558 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 10% 0.909 10.826 0.751 0.683 0.621 0.564 0.513 10.467 0.424 0.386 12% 0.893 0.797 10.712 10.636 0.567 0.507 0.452 0.404 0.361 0.322 14% 0.877 0.769 0.675 0.592 0.519 0.456 10.400 0.351 10.308 0.270 10 10. Jimmy Reynolds is considering investing $12,000 in a project with the following cash revenues and expenses: Revenues Expenses Year 1 $20,000 $18,000 Year 2 $22,000 $19,000 Year 3 $22,000 $20,000 Year 4 $22,000 $17,000 Year 5 $25,000 $17,000 Jimmy requires a minimum rate of return of 8%. A. Calculate the net cash inflows in each of the 5 years. B. What is the payback period? C. What is the net present value of the investment? (Use table above)