Ritter Razors is considering an equipment investment that will cost $940,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1: $488,000; Year 2: $396,000; and Year 3: $288,000. Ritter wants to know the equipment's IRR. (Click the icon to view the present value annuity table.) (Click the icon to view the future value annuity table.) Requirement (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) Use trial and error to find the IRR within a 2% range. (Hint: Use Ritter's hurdle rate of 10% to begin the trial-and-error process.) Use a business calculator or spreadsheet to compute the exact IRR. Begin by calculating the NPV at three rates: 10%, 12 %, and 14%. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV at 10% is Present Value of Annuity of $1 Period 7 6.728 Period 8 7.652 Period 9 8.566 Period 10 9.471 Period 11 10.368 Period 12 11.255 7.325 7.020 6.733 501 5.417 5.242 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 6.463 6.210 5.747 5.335 4.968 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 Period 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 Period 6 5.795 16% 18% 20% 0.862 0.847 1.605 1.566 2.246 2.174 2.106 0.833 1.528 2.991 3.889 3.685 3.498 3.326 4.288 4.039 3.812 3.605 4.639 4.344 4.078 3.837 8.162 7.786 7.435 8.983 8.530 8.111 7.108 6.802 6.247 5.759 5.328 7.722 7.360 6.710 6.145 5.650 4.946 4.607 4.303 4.031 5.216 4.833 4.494 4.192 S 9.787 9.253 8.760 10.575 9.954 9.385 8.306 7.887 7.139 6.495 5.938 8.863 8.384 7.536 6.814 6.194 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 6.623 5.453 5.029 4.656 4.327 5.660 5.197 4.793 4.439 5.842 5.342 4.910 4.533 6.002 5.468 5.008 4.611 6.142 5.575 5.092 4.675 5.929 5.353 4.870 6.873 6.097 5.467 4.948 7.003 6.177 5.517 4.979 7.105 6.233 5.548 4.997 C C Periods Period 1 1% 2% 3% 0.990 0.980 0.971 tri me 4% 5% 0.962 0.952 0.943 6% Period 2 0.980 0.961 0.943 0.925 0.907 0.890 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 Present Value of $1 12% 8% 10% 0.926 0.909 14% 16% 18% 20% 0.857 0.826 0.893 0.877 0.862 0.847 0.833 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.797 0.769 0.743 0.718 0.694 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.681 0.621 0.567 0.519 0.476 0.437 0.402 a Period 6 0.942 0.888 0.837 0.790 Period 7 0.933 0.871 0.813 0.760 Period 8 0.923 0.853 0.789 Period 9 0.914 0.837 0.766 0.731 0.703 Period 10 0.905 0.820 0.744 0.676 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 s or S Period 11 0.896 0.804 0.722 0.650 Period 12 0.887 0.788 0.701 Period 13 0.879 0.773 0.681 Period 14 0.870 0.758 0.661 Period 15 0.861 0.743 0.642 Period 20 0.820 0.673 0.554 Period 25 0.780 0.610 0.478 0.456 0.377 0.375 0.295 Period 30 0.742 0.552 0.412 0.308 0.231 Period 40 0.672 0.453 0.307 0.208 0.142 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 0.312 0.215 0.149 0.233 0.146 0.092 0.174 0.099 0.057 0.097 0.046 0.022 0.104 0.073 0.051 0.037 0.026 0.059 0.038 0.024 0.016 0.010 0.033 0.020 0.012 0.007 0.004 0.011 0.005 0.003 0.001 0.001 Future Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 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 Period 2 2.010 2.020 2.030 2.040 Period 3 3.030 3.060 3.091 3.122 Period 4 4.060 4.122 4.184 4.246 4.310 Period 5 5.101 5.204 5.309 5.416 5.526 2.050 2.060 2.080 2.100 3.153 3.184 3.246 3.310 3.374 3.440 4.375 4.506 4.641 4.779 4.921 5.637 5.867 6.105 6.353 6.610 2.120 2.140 2.160 2.180 3.506 3.572 5.066 5.215 6.877 7.154 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 Period 10 7.336 7.716 8.115 8.536 8.394 8.923 9.487 10.089 9.897 10.637 11.436 12.300 9.369 9.755 10.159 10.583 11.027 11.491 12.488 13.579 14.776 10.462 10.950 11.464 12.006 12.578 13.181 14.487 15.937 17.549 6.975 8.977 9.442 10.730 11.414 12.142 13.233 14.240 15.327 16.085 17.519 19.086 19.337 21.321 23.521 eg in or a Period 11 Period 12 Period 13. he Period 14 Period 15 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 12.683 13.412 14.192 15.026 15.917 16.870 18.977 21.384 24.133 13.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 28.029 14.947 15.974 17.086 18.292 19.599 21.015 24.215 27.975 32.393 16.097 17.293 18.599 20.024 21.579 23.276 27.152 31.772 37.280 Period 20. 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025 115.380 Period 25 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 Period 30 34.785 40.568 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 Period 40 48.886 60.402 75.401 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757 4,163.213 23.045 25.733 28.755 27.271 30.850 34.931 32.089 36.786 42.219 37.581 43.672 50.818 43.842 51.660 60.965 146.628 Future Value of $1 Periods 1% 2% 3% Red 4% Period 1 1.010 1.020 Use Period 2 1.020 1.040 1.061 bus Period 3 1.030 1.061 1.093 Period 4 1.041 1.082 1.126 Period 5 1.051 1.104 1.159 Period 6 1.062 Period 7 1.072 Period 8 1.083 1.149 1.126 1.194 1.230 5% 6% 8% 10% 12% 1.030 1.040 1.050 1.060 1,080 1.100 1.120 1.082 1.103 1.124 1.166 1.210 1.254 1.125 1.158 1.191 1.260 1.331 1.405 1.170 1.216 1.262 1.360 1.464 1.574 1.217 1.276 1.338 1.469 1.611 1.762 1.265 1.340 1.316 1.407 14% 16% 18% 1.140 1.160 20% 1.180 1.200 1.300 1.346 1.392 1.440 1.482 1.561 1.643 1.728 1,689 1.811 1.939 2.074 1.925 2.100 2.288 2.488 1.172 1.267 1.369 1.477 Period 9 Period 10 1.105 1.094 1.195 1.305 1.423 1.551 1.419 1.587 1.772 1.974 2.195 2.436 2.700 1.504 1.714 1.949 2.211 2.502 2.826 3.185 1.594 1.851 2.144 2.476 2.853 1.689 1.999 2.358 2.773 3.252 2.986 3.583 3.278 3.759 4.300 3.803 4.435 5.160 1.219 1.344 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 5.234 6.192 Beg min Period 11 1.116 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 Period 12 1.127 The Period 13 Period 14 1.149 1.138 1.268 1.426 1.294 1.469 1.319 1.601 1.796 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 1.665 1.886 2.133 2.720 3.452 4.363 5.492 6.886 8.599 10.699 1.513 1.732 1.980 2.261 2.937 3.797 4.887 6.261 7.988 10.147 12.839 Period 15 1.161 1.346 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 Period 20 Period 25 1.282 Period 30 1.348 Period 40 1.489 1.220 1.486 4.661 1.806 2.191 2.653 3.207 6.727 9.646 13.743 19.461 27.393 1.641 2.094 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 1.811 2.427 3.243 4.322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.37 2.208 3.262 4.801 7.040 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1,469.7 38.338 The NPV 2+ 10% is The NPV at 12% is The NPV at 14% is The exact IRR using a business calculator. Spreadsheet is 93