Salsa Company is considering an investment in technology to improve its operations. The investment costs $243,000 and will yield the following net cash flows. Management requires a 8% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 2 3 4 5 Net cash Flow $ 47,700 52,700 75,800 94,300 126,100 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your Payback period answer to 1 decimal place.) Year Cash inflow (outflow) Cumulative Net Cash Inflow (outflow) (247,000) Initial investment $ Year 1 Year 2 Year 3 Year 4 (243,000) $ 126,100 47,700 52,700 75,800 94,100 Year 5 0 Payback period = Required 1 Required 2 Required 3 Determine the break-even time for this investment. (Enter cash outflows with a minus sign. Round your break-even time answer to 1 decimal place.) Year Table factor Cash inflow (outflow) (243,000) Present Value of Cash Flows Cumulative Present Value of Cash Flows $ Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 0 0 0 0 Break-even time = Required 1 Required 2 Required 3 Determine the net present value for this investment. Net present value Table B.1* Present Value of 1 p=1/(1+i)" Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 0.9901 0.9804 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.8929 1 0.9709 0.9426 0.8696 0.7561 2 0.9803 0.9612 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.9091 0.8264 0.7513 0.7972 2 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7118 0.6575 3 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 TT 0.7350 0.7084 0.6830 0.6355 0.5718 0.7629 0.7130 4 5 0.9515 0.9057 0.6806 0.6499 0.6209 0.5674 5 0.8626 0.8375 0.8219 0.7903 0.7835 0.7462 0.7473 0.7050 0.4972 0.4323 6 0.9420 0.8880 0.6663 0.6302 0.5645 0.5066 6 0.5963 0.5470 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5132 0.4523 0.3759 7 8 0.9235 0.8535 0.7894 0.6768 0.5403 0.4039 0.3269 8 0.7307 0.7026 0.6274 0.5919 0.5019 0.4604 9 0.9143 0.8368 0.7664 0.5820 0.5439 0.5083 0.6446 0.5002 0.4665 0.4241 0.3855 0.3606 IT 0.2843 9 10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.4632 0.4224 0.3220 0.2472 10 11 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 11 0.8963 0.8874 0.2149 0.1869 12 0.7014 0.5568 0.4970 0.4440 0.3971 0.3555 12 0.7885 0.7730 0.6246 0.6006 TIT 13 0.8787 0.6810 0.3262 0.1625 13 0.4150 0.3878 0.3677 0.3405 14 0.2875 0.2567 0.2292 0.2046 0.1827 0.1631 0.8700 0.5303 0.5051 0.4810 0.7579 0.6611 0.5775 0.2992 0.4688 0.4423 0.4173 0.3936 14 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1413 0.1229 15 0.8613 0.7430 0.6419 0.3624 0.3152 0.2745 15 0.5553 0.5339 16 0.8528 0.7284 0.6232 0.4581 0.3387 0.2919 0.2519 0.1069 16 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.2703 0.2311 0.1456 0.0929 17 0.3166 0.2959 18 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2502 0.2120 0.1300 0.0808 18 19 0.6864 0.3957 0.3305 0.2317 0.1161 0.0703 19 0.8277 0.8195 0.7798 0.5703 0.5537 0.1799 0.1635 0.1486 0.4746 0.4564 0.2765 0.2584 0.1945 0.1784 20 0.6730 0.3769 0.3118 0.2145 0.1037 0.0611 20 25 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 25 30 0.5521 0.4120 0.2314 0.1314 0.0994 0.0754 0.0573 0.0334 30 0.7419 0.7059 0.6717 0.3083 0.2534 35 0.5000 0.1813 0.1741 0.1301 0.0972 0.0937 0.0676 0.0490 0.0356 0.0189 0.3554 0.3066 0.0151 0.0075 0.0037 35 40 0.4529 0.2083 0.1420 0.0668 0.0460 0.0318 0.0221 0.0107 40 *Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n = 12 and i = 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5,000 x 0.5568). f= 1 + i * Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0 1 1.0100 1.0200 1.0300 1.0400 1.0500 1,0600 1.0700 1.0800 L 1.0900 1.1000 1.1500 1 | |- | | | 1.0000 1.1200 1.2544 1.4049 2 1.0201 1.0404 1.0609 1.0816 1.1236 1.1449 1.1664 1.3225 | || | 2 . 1.1025 1.1576 1.1881 1.2950 1.2100 1.3310 3 1.0303 1.0612 1.0927 1.1910 1.2250 1.2597 1.5209 3 ------ 4 1.0406 1.0824 1.1249 1.1699 1.2167 1.1255 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 1.7490 4 5 1.0510 1.1041 1.2763 1.4693 1.5386 1.6105 1.7623 5 1.3382 1.4185 1.4026 1.5007 6 1.1593 1.1941 1.2299 1.1262 1.3401 1.5869 1.6771 1.7716 1.9738 1.0615 1,0721 6 2.0114 2.3131 2.6600 1.2653 1.3159 7 1.1487 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 7 2.2107 2.4760 8 1.0829 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 3.0590 8 9 1.0937 1.1951 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 3.5179 9 10 1.1046 1.2190 1.3439 1.4802 1.9672 2.3674 2.5937 1.6289 1.7103 4.0456 1.7908 1.8983 10 2.7731 3.1058 3.4785 2.1589 2.3316 11 1.1157 1.2434 1.5395 2.1049 2.5804 2.8531 4.6524 11 1.3842 1.4258 12 1.1268 1.2682 1.6010 1.7959 2.0122 2.2522 2.5182 2.8127 3.1384 3.8960 5.3503 12 13 1.1381 1.2936 1.4685 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 3.4523 4.3635 13 6.1528 7.0757 14 1.1495 1.3195 1.5126 1.9799 2.2609 3.3417 3.7975 14 2.5785 2.7590 2.9372 3.1722 4.8871 5.4736 15 1.7317 1.8009 1.8730 1.1610 1.3459 1.5580 2.3966 3.6425 4.1772 15 H 16 1.1726 1.3728 3.4259 3.9703 2.0789 2.1829 2.2920 4.5950 16 -|- -|- 1.6047 1.6528 2.5404 2.6928 2.9522 3.1588 6.1304 6.8660 8.1371 9.3576 10.7613 12.3755 17 1.1843 1.4002 1.9479 3.7000 5.0545 17 4.3276 4.7171 18 1.1961 1.4282 2.0258 2.4066 2.8543 3.3799 3.9960 5.5599 7.6900 18 1.7024 1.7535 *|* 19 1.2081 3.0256 3.6165 4.3157 5.1417 8.6128 14.2318 19 1.4568 1.4859 2.5270 2.6533 6.1159 6.7275 20 1.2202 2.1068 2.1911 2.6658 1.8061 3.2071 3.8697 4.6610 5.6044 9.6463 20 16.3665 32.9190 25 1.2824 1.6406 2.0938 3.3864 4.2919 5.4274 6.8485 8.6231 10.8347 17.0001 25 30 1.3478 1.8114 3.2434 4.3219 10.0627 13.2677 17.4494 66.2118 30 2.4273 2.8139 5.7435 7.6861 7.6123 10.6766 35 1.4166 1.9999 3.9461 5.5160 20.4140 28.1024 29.9599 52.7996 93.0510 133.1755 14.7853 21.7245 35 40 1.4889 2.2080 3.2620 4.8010 7.0400 10.2857 14.9745 31.4094 45.2593 267.8635 40 * Used to compute the future value of a known present amount. For example: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n = 20 and i = 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 ($3,000 x 1.4859). Table B.3fPresent Value of an Annuity of 1 p= [1 - 1/(1 + i)"\/i Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods UI 1 0.9901 0.9804 0.9709 0.9615 AL 0.9434 0.9346 0.9259 0.9174 0.8929 1 0.9524 1.8594 0.9091 1.7355 0.8696 1.6257 2. 1.9704 1.9416 1.9135 1.8861 1.8080 1.7833 1.6901 2 1.8334 2.6730 1.7591 2.5313 3 2.9410 2.8839 II 2.8286 2.7751 2.7232 2.6243 2.5771 2.4869 2.4018 2.2832 3 4 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.0373 2.8550 4 5 4.8534 4.7135 4.5797 4.4518 4.3295 4.1002 3.6048 3.3522 5 3.1699 3.7908 4.3553 4.2124 4.9173 3.9927 4.6229 3.8897 4.4859 6 ITT 5.7955 5.6014 5.4172 5.2421 5.0757 4.1114 3.7845 6 4.7665 5.3893 7 6.4720 6.2303 5.7864 5.5824 5.2064 5.0330 4.8684 4.5638 4.1604 7 6.7282 7.6517 8 7.3255 7.0197 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 8 J 6.0021 6.7327 7.4353 8.1109 6.4632 7.1078 9 8.5660 8.1622 5.7590 7.7861 8.5302 9 6.8017 7.3601 6.5152 7.0236 6.2469 6.7101 5.9952 6.4177 4.4873 4.7716 5.0188 5.3282 5.6502 10 9.4713 8.9826 7.7217 10 6.1446 6.4951 11 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 5.9377 11 12 12 11.2551 10.5753 9.9540 9.3851 8.3838 7.9427 7.5361 6.1944 13 7.1607 7.4869 12.1337 9.9856 8.8633 9.3936 9.8986 IT 8.8527 10.6350 11.2961 8.3577 13 6.8137 7.1034 7.3667 7.9038 8.2442 6.4235 6.6282 5.2337 5.4206 5.5831 5.7245 5.8474 5.9542 14 13.0037 9.2950 8.7455 11.3484 12.1062 12.8493 13.5777 14 10.5631 11.1184 7.7862 8.0607 15 11.9379 10.3797 9.1079 8.5595 6.8109 15 13.8651 14.7179 9.7122 10.1059 7.6061 7.8237 16 12.5611 11.6523 9.4466 8.8514 8.3126 16 17 15.5623 14.2919 13.1661 12.1657 9.7632 9.1216 8.5436 6.0472 17 10.4773 10.8276 8.0216 8.2014 18 16.3983 14.9920 10.0591 9.3719 8.7556 6.1280 18 19 6.9740 7.1196 7.2497 7.3658 7.4694 7.8431 13.7535 14.3238 14.8775 12.6593 13.1339 13.5903 10.8378 11.2741 11.6896 12.0853 12.4622 14.0939 15.3725 10.3356 9.6036 17.2260 18.0456 8.9501 15.6785 16.3514 6.1982 19 11.1581 11.4699 8.3649 8.5136 | 20 10.5940 9.8181 9.1285 6.2593 20 25 22.0232 19.5235 17.4131 11.6536 9.8226 9.0770 6.4641 25 15.6221 17.2920 10.6748 11.2578 30 25.8077 22.3965 12.4090 10.2737 9.4269 8.0552 6.5660 30 19.6004 21.4872 12.7834 13.7648 14.4982 15.0463 35 18.6646 12.9477 11.6546 9.6442 6.6166 35 29.4086 32.8347 24.9986 27.3555 16.3742 17.1591 10.5668 10.7574 8.1755 8.2438 40 23.1148 19.7928 13.3317 11.9246 9.7791 6.6418 40 *Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%? For (n = 10,i = 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177). Table B.4$Future Value of an Annuity of 1 f= [(1 + i)" - 1]/i Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 15% Periods 12% 1.0000 1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1 1.0000 2.1500 2 2.0100 2.0200 2.0300 2.0400 2.0800 2.0900 2.1000 2.1200 2 2.0500 3.1525 2.0600 3.1836 2.0700 3.2149 3 3.0301 3.0604 3.0909 3.1216 3.2464 3.2781 3.3100 3.3744 3.4725 3 4 4.0604 4.1216 4.1836 4.3746 4.4399 4.6410 4.7793 4.9934 4 4.2465 5.4163 4.3101 5.5256 TTT 4.5061 5.8666 4.5731 5.9847 5 5.1010 5.2040 5.3091 5.6371 5.7507 6.1051 6.3528 6.7424 5 6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 8.7537 6 7 7.2135 7.4343 7.6625 7.8983 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 7 8.1420 9.5491 11.0668 13.7268 8 8.2857 8.8923 9.8975 10.2598 11.4359 12.2997 8 8.5830 9.7546 9.2142 10.5828 10.6366 12.4876 11.0285 13.0210 9 9.3685 10.1591 11.0266 11.4913 11.9780 13.5795 14.7757 16.7858 9 10 10.9497 12.0061 12.5779 13.1808 13.8164 15.1929 15.9374 17.5487 10 11.4639 12.8078 14.4866 16.6455 11 12.1687 13.4864 14.2068 14.9716 17.5603 11 10.4622 11.5668 12.6825 13.8093 20.6546 24.1331 13.4121 20.3037 24.3493 29.0017 34.3519 15.0258 16.8699 15.7836 17.8885 20.1406 20.1407 12 13 14.1920 15.6178 12 18.5312 21.3843 24.5227 15.9171 17.7130 19.5986 18.9771 21.4953 14.6803 16.6268 18.8821 22.9534 28.0291 13 14 14.9474 15.9739 17.0863 18.2919 22.5505 26.0192 32.3926 40.5047 14 21.0151 23.2760 24.2149 27.1521 15 16.0969 17.2934 18.5989 20.0236 21.5786 25.1290 27.9750 31.7725 35.9497 37.2797 47.5804 29.3609 33.0034 15 16 17.2579 18.6393 21.8245 23.6575 27.8881 42.7533 55.7175 16 25.6725 28.2129 30.3243 33.7502 17 18.4304 25.8404 40.5447 48.8837 17 20.1569 21.7616 23.4144 25.1169 20.0121 21.4123 22.8406 30.8402 33.9990 36.9737 41.3013 18 37.4502 19.6147 20.8109 22.0190 18 23.6975 25.6454 27.6712 29.7781 28.1324 30.5390 33.0660 30.9057 33.7600 65.0751 75.8364 88.2118 55.7497 63.4397 19 46.0185 19 37.3790 40.9955 41.4463 45.7620 45.5992 51.1591 57.2750 98.3471 20 24.2974 26.8704 36.7856 51.1601 72.0524 20 102.4436 212.7930 25 41.6459 73.1059 84.7009 133.3339 25 36.4593 47.5754 30 32.0303 40.5681 49.9945 56.0849 47.7271 66.4388 90.3203 136.3075 164.4940 28.2432 34.7849 41.6603 48.8864 434.7451 30 54.8645 79.0582 111.4348 154.7620 63.2490 94.4608 138.2369 199.6351 241.3327 431.6635 35 73.6522 113.2832 172.3168 259.0565 215.7108 271.0244 881.1702 60.4621 75.4013 35 40 60.4020 95.0255 120.7998 337.8824 442.5926 767.0914 | 1,779.0903 3 40 $Used to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%? For (n = 6, i = 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 x 7.3359)