Reference Future Value of Ordinary Annuity of $1 2.060 Period 3 3.184 Period 4 4.375 Period 5 5.637 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2.020 2.030 2.040 2.050 2.070 2.080 2.090 2.100 2.120 2.140 2.150. 3.030 3.060 3.091 3.122 3.153 3.215 3.246 3.278 3.310 3.374 3.440 3.473 4.060 4.122 4.184 4.246 4.310 4.440 4.506 4.573 4.641 4.779 4.921 4.993 5.101 5.204 5.309 5.416 5.526 5.751 5.867 5.985 6.105 6.353 6.610 6.742 Period 6 6.152 6.308 6.468 6.633 6.802 Period 7 7.214 7.434 7.662 7.898 8.142 Period 8 8.286 8.583 8.892 9.214 9.549 Period 9 9.369 9.755 10.16 10.58 11.03 Period 10 10.46 10.95 11.46 12.01 12.58 6.975 8.394 9.897 11.49 13.18 7.153 7.336 523 7.716 8.115 8.536 8.754 8.654 8.923 9.200 9.487 10.09 10.73 11.07 10.260 10.64 11.03 11.44 12.30 13.23 13.73 11.98 12.49 13.02 13.58 14.78 16.09 16.79 13.82 14.49 15.19 15.94 17.55 19.34 20.30 Period 11 Period 12 11.57 12.17 12.81 13.49 14.21 12.68 13.41 14.19 15.03 15.92 14.97 16.87 Period 13 13.81 14.68 15.62 16.63 17.71 18.88 Period 14 14.95 15.97 17.09 18.29 19.60 21.02 Period 15 16.10 17.29 18.60 20.02 21.58 23.28 Period 16 17.26 18.64 20.16 21.82 23.66 25.67 Period 17 18.43 20.01 21.76 23.70 25.84 28.21 Period 18 19.61 21.41 23.41 25.65 28.13 30.91 Period 19 20.81 22.84 25.12 27.67 30.54 33.76 Period 20 22.02 24.30 26.87 29.78 33.07 36.79 Period 21 23.24 25.78 28.68 31.97 35.72 39.99 15.78 16.65 17.56 18.53 20.65 23.04 24.35 17.89 18.98 20.14 21.38 24.13 27.27 29.00 20.14 21.50 22.95 24.52 28.03 32.09 34.35 22.55 24.21 26.02 27.98 32.39 37.58 40.50 25.13 27.15 29.36 31.77 37.28 43.84 47.58 27.89 30.32 33.00 35.95 42.75 50.98 55.72 30.84 33.75 36.97 40.54 48.88 59.12 65.08 34.00 37.45 41.30 45.60 55.75 68.39 75.84 37.38 41.45 46.02 51.16 63.44 78.97 88.21 41.00 45.76 51.16 57.28 72.05 91.02 102.4 44.87 50.42 56.76 64.00 81.70 104.8 118.8 Print Done - rs ra "0" lue.) Reference Periods 1% 2% 3% 4% 5% 6% 7% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 Present Value of $1 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.544 0.508 0.527 0.497 0.396 0.331 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 Period 11 0.896 0.804 0.722 0.650 0.585 0.475 0.429 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 Period 12 0.887 0.788 0.701 0.625 0.557 0.444 0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 Period 13 0.879 0.773 0,681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.205 0.160 0.141 0.125 0.099 0.078 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Period 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 Period 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.146 0.108 0.093 0.080 0.060 0.045 Period 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 Period 19 0.828 0.686 0.570 0.475 0.277 0.232 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.031 0.258 0.215 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.026 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 0.735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 - 0.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.630 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 0.540 0.502 0.467 0.404 0.351 0.327 0.305 0.26 0.233 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 21 0.811 0.660 0.538 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.022 Reference Period 3 Periods 1% 2% 3% Period 1 0.990 0.980 0.971 Period 2 1.970 1.942 1.913 2.941 2.884 2.829 Period 4 3.902 3.808 3.717 Period 5 4.853 4.713 Period 6 Present Value of Ordinary Annuity of $1 5% 4% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.528 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.283 2.246 2.174 2.106 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.855 2.798 2.690 2.589 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.991 5,795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.031 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 4.494 4.192 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.327 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 5.197 4.793 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 4.910 4.533 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5.008 4.611 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.675 Period 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 5.954 Period 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 Period 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 Period 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 Period 21 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 5.973 5.384 4.8911 Period 11 5.669 5.162 4.730 5.749 5.222 4.775 6.128 5.818 5.273 4.812 6.198 5.877 5.316 4.844 6.259 5.929 5.353 4.870 Print Done e of of S of C hces or a the payback the ARR (ac the NPV (ne er any factor Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. - Click the icon to view F 2. What are the strengths and weaknesses of these capital budgeting methods? 3. Which expansion plan should Limes Company choose? Why? rs 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? Print Done rs ra "0" for any ze lue.) Net Cash Annuity PV Factor PV Factor Present Limes Company operates a chain of sandwich shops (Click the icon to view additional information.) K Read the equirement ator Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans Calculate the payback for both plans. (Round your answers to one decimal place, XX) (Click the icon to view Present Value of $1 table) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Payback Plan A Plan B years years Calculate the ARR (accounting rate of retum) for both plans. (Round your answers to the nearest tenth percent, XX%) ARR Plan A Plan B Caculate the NPV (net present value) of each plan. Begin by calculating the NPV of Plan A. (Complete all answer boxes. Enter a "0" for any zero balances or amounts that do not apply to the plan. Enter any factor amounts to three decimal places, XXX Use parentheses or a minus sign for a negative net present value) Plan A: Years 1-10 Present value of annuity 10 Present value of residual value Net Cash Annuity PV Factor Inflow (-10%, n=10) PV Factor (-10%, n=10) Present Value or Limes Company operates a chain of sandwich shops. (Click the icon to view additional information.) Read the requirements Plan A: Years 1-10 Present value of annuity 10 Present value of residual value Total PV of cash inflows 0 Initial Investment Net present value of Plan A This question: point(s) pos (Click the icon to view Present Valu (Click the icon to view Present Value (Click the lean in in Chien Van Net Cash Inflow Annuity PV Factor (i=10%, n=10) PV Factor (i=10%, n=10) Present Value Calculate the NPV of Plan B. (Complete all answer boxes. Enter a "0" for any zero balances or amounts that do not apply to the plan. Enter any factor amc Use parentheses or a minus sign for a negative net present value.) Plan B: Years 1-10 Present value of annuity Present Net Cash Inflow Annuity PV Factor PV Factor (-10%, n=10) (i=10%, n=10) Value 10 Present value of residual value Total PV of cash inflows 0 Initial Investment Net present value of Plan B Limes Company operates a chain of sandwich shops. (Click the icon to view additional information.) Read the requirements Calculate the profitability index of these two plans. (Round to two decimal places X.XX.) + C (Click the icon to view Present (Click the icon to view Present Click the lean to in Cut Ve = Profitability index Plan A Plan B Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the term with the strengths and weaknesses listed for each of the four capital budgeting models. Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models. is easy to understand, is based on cash flows, and highlights risks. However, it ignores profitability and the time value of money. Can be used to assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments' initial cost. It has none of the weaknesses of the other models. Requirement 3. Which expansion plan should Limes Company choose? Why? Limes Company should invest in because it has a payback period, a ARR, a net present value, and a profitability index. Requirement 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? The IRR (internal rate of return) of Plan A is between This rate the company's hurdle rate of 10%