Question 5 Assume that Wal-Mart Stores, Inc. has decided to surface and maintain for 10 years a vacant lot next to one of its stores to serve as a parking lot for customers. Management is considering the following bids involving two different qualities of surfacing for a parking area of 11,900 square yards. Bid A: A surface that costs $5.75 per square yard to install. This surface will have to be replaced at the end of 5 years. The annual maintenance cost on this surface is estimated at 25 cents per square yard for each year except the last year of its service. The replacement surface will be similar to the initial surface. Bid B: A surface that costs $10.00 per square yard to install. This surface has a probable useful life of 10 years and will require annual maintenance in each year except the last year, at an estimated cost of 9 cents per square yard. Click here to view factor tables Compute present value of the bids. You may assume that the cost of capital is 9%, that the annual maintenance expenditures are incurred at the end of each year, and that prices are not expected to change during the next 10 years. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value of outflows for Bid A Present value of outflows for Bid B Which bid should be accepted by Wal-Mart. Wal-Mart should accept INTEREST TABLES AND THEIR CONTENTS 1. FUTURE VALUE OF 1 TABLE. Contains the amounts to which I will accumulate if deposited now at a specified rate and left for a specified number of periods (Table 6.1). Table 6.1 FUTURE VALUE OF 1 (FUTURE VALUE OF A SINGLE SUM) 6 FV70 Periods S2 1.60000 10500 13000 106000 105000 10000 2 94040 100 100 100 M 1065121 109 109273 1136 L15761916 100043 1.1951 12551 1.1 121551 120 1.100 1.1941 1942 1.2 1.2708 112016 119 120 124512 114010 14 1.1489 1.188 1.2297 1.31993 1.40710150363 L17166 12131477 13657 1447146 1.1950913435 1.30477 1.42331 155133 121899 1.2008 1409 1.48194 1.34337 1.31209138423 1.575.71054 930 104 1.3489 143576 1.000 1.79586 201220 129611.3751 3 1.57 14 1.31948 1.4129 1.51259 1.73168.979932.300 1.34587 149 155797 1.30094 2.0789 2.1956 1.37279 1.48451 1.60471 1.87 2.100 2.500 140604 1.52162 1685 1849 290 2.69277 1438 1.596 1.7004 2005 2006 285854 1.45681 1.45 1.7535 2.104852. 20 148 149 1506112191122453303.2014 21 1.31567 1.695 169 22707 2.76396356 15459872157 191610 2.299336 3.05 1.376 1.7645197159 246472 3.071 3.1995 24 044 1.013 201279 2563 40 16061 1.35 2.09378 2.66.554 3.38638 4.2017 26.6734 1.99 2.15689 2.77347 3.58567 4.59838 27 70.9 1.9470 222129 2337 3.73346 23 1.14100 1.9 2.28793 2.03.20135.1110 2.7754 20451 235657 14.11614 5.41819 11136 2.00757 2.42726 3.34340 4.321945.74540 31 84759 2.100 2.337313 4.538046.08810 1215454 2037 23750 3.50 4.76194 6.25330 1.92223 2.255 2.68234 56338 5.09.2009 34 960 2.31582 2.73191 792 5.33335 35. 237321 261336 3.40 5.56789 35 2.1989 2.43354 2.5908 4.1993 5.791632.14735 37 2.000 2.4033 2.98333 4.369.0141 38 2.12230 2555683.07478 4.4381638548 1542 2.167 260957 3.16703 63637 6.70 2.70131 49 2.2004 2.685053204 4.8002 2 10% 11% Pride 1.8000 18000 1.1000 11000 1000 15000