Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $371,760 and to have a six-year life and no salvage value. The equipment is expected to generate income of $15,239 and net cash flow of $80,417 in each year of its six-year life. Santana requires an 9% return on all investment (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) (Negative net present values should be indicated with a minus sign. Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole number.)

Required: 1-a. Compute the payback period for this equipment. 1-b. Compute the net present value for this equipment. 1-c. Compute internal rate of return for this equipment. 2. If Santana requires investments to have payback periods of four years or less, should she invest in this equipment? 3. If Santana requires investments to have at least an 9% internal rate of return, should she invest in this equipment?estments.

Table B.2 Future Value of 1 f = (1 + )" Rate 7% Periods 1% 2% 3% 4% 5% 8% 9% 10% 12% 15% Periods 6%. 1.0000 0 1.000X0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0 1 1.0700 1 1.0100 1.0201 1.0200 1.0404 1.0300 1.0609 1.0400 1.0816 1.1249 1.0500 1.1025 1.0600 1.1236 1.0800 1.1664 1.1000 1.2100 1.0900 1.1881 1.2950 1.1200 1.2544 2 1.1500 1.3225 1.1449 2 3 1.0303 1.1576 1.1910 1.2250 1.3310 3 1,0612 1.0824 1.2597 1.3605 1.0927 1.1255 1.1593 1.4049 1.5735 4 1.1699 1.2155 1.4116 1.4641 1.0406 1.0510 4 1.2625 1.3382 1.5209 1.7490 2.0114 1.3108 1.4026 s 1.2763 1.4693 1.7623 5 1.1041 1.1262 1.2167 1.2653 1.5386 1.6771 1.6105 1.7716 6 1.0615 1.1941 1.4185 1.5007 1.5869 1.9738 2.3131 6 7 1.0721 1.2299 1.3159 1.3401 1.4071 1.4775 1.8280 1.9487 2.2107 2.6600 1.1487 1.1717 7 1.5036 1.5938 1.6058 1.7182 1.7138 1.8509 8 1.9926 2.1436 8 8 2.4760 2.7731 3.0590 3.5179 9 1.3686 1.4233 14802 1.9990 9 1.1951 1.2190 1.2434 1.2668 1.3048 1.3439 1.3842 1.4258 1.5513 1.6289 1.6895 1.7908 10 1.8385 1.9672 2.1049 2.3579 2.5937 2.1719 2.3674 2.5804 4.0456 4.6524 10 11 11 1.0829 1.0937 1.1046 1.1157 1.1268 1.1381 1.1495 1.1610 2.1589 2.3316 2.5182 1.8983 1.7103 1.7959 2.8531 3.1.384 3.1058 3.4785 3.8960 4.3635 1.2682 2.2522 2.8127 5.3503 1.5395 1.6010 1.6651 1.7317 12 13 1.4685 1.8856 2.7196 3.4523 6.1528 1.2936 1.3195 2.4098 2.5785 14 2.0122 2.1329 2.2609 2.3966 2.5404 12 13 14 1.5126 1.9799 3.0658 3.3417 3.6425 2.9372 7,0757 15 1.3459 1.5580 2.0789 2.7590 15 1.8009 1.8730 3.1722 3.4250 3.7975 4.1772 4.5950 5.0845 4.8871 5.4736 6.1.304 6.8660 8.1371 9.3576 16 1.1726 1.3728 2.9522 16 1.6047 1.6528 2.1829 2.2920 3.9703 4.3276 17 1.1843 1.4002 1.9479 2.6928 3.7000 10.7613 17 3.1588 3.3799 18 1.7024 2.0258 2.4066 5.5599 7.6900 1.1961 1.2081 1.4282 1.4568 2.8543 3.0256 3.9960 4.3157 4.7171 5.1417 19 3.6165 8.6128 1.7535 1.8061 20 12.3755 14.2318 16.3665 32.9190 2.1068 2.1911 2.6658 1.4859 18 19 20 2.5270 2.6533 3.3864 1.2202 1.2824 4.6610 3.2071 4.2919 6.1159 6.7275 10.8347 3.8697 5.4274 5.6044 8.6231 25 1.6406 6.8485 9.6463 17.0001 29.9999 2.0938 2.4273 25 30 1.3478 3.2434 43219 5.7435 13.2677 66.2118 30 1.4166 1.8114 1.9999 2.2080 17.4494 28.1024 35 40 52.7996 133.1755 7.6123 10.6766 14.9745 2.8139 3.2620 35 10.0627 14.7853 21.7245 3.9461 4.8010 5.5100 7.0407) 7.6861 10.2857 20.4140 31.4094 1.4889 45.2593 93.0510 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 = 290 (20 quarterly periods and quarterly interest rate of 290). the factor is 1.4859. The accumulated value is $4.457.70 ($3.000 x 1.4859). Table B.1* Present Value of 1 p=1/(1+i)" H Rate Periods 1% 2% 2% 3% 4% % 5% 6% 7% 8% 8 9% 10% 12% 15% Periods 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 2 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 3 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 4 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 5 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 6 7 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 7 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 8 9 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 9 10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 10 11 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.350S 0.2875 0.2149 11 12 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.35SS 0.3186 0.2567 0.1869 12 13 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 13 14 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 14 15 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 15 16 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 16 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 17 18 0.8360 0.7002 0.5874 0.4936 04155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 18 19 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 19 20 0.8195 0.6730 0.5537 04564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 20 25 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 25 30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 30 35 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0190 0.0356 0.0189 0.0X175 35 40 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.160 0.0318 0.01221 0.0107 0.0037 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 0.5568). Table B.3+Present Value of an Annuity of 1 p = [1 - 1/1+1)" Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 12% 15% Periods 10% 0.9091 1 1 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.8929 1 0.9901 1.9704 0.9804 1.9416 0.9174 1.7591 2 1.9135 1.8594 1.8080 1.7833 1.8861 2.7751 2 0.8696 1.6257 2.2832 1.6901 2.4018 3 2.9410 2.8839 2.8286 2.7232 2.5771 2.5313 3 3 1.8334 2.6730 3.4651 4.2124 4 3.8077 3.9120 4.8534 3.0373 3.7171 4.5797 4 2.6243 3.3872 4.1002 3.6299 4.4518 3.5460 4.3295 1.7355 2.4869 3.1699 3.7908 4.3553 3.3121 3.9927 3.2397 3.8897 S 3.6048 5 5 2.8550 3.3522 3.7845 4.1604 4.7135 5.6014 6.4720 6 5.4172 5.2421 4.7665 4.1114 6 4.9173 5.5824 4.6229 5.2064 4.4859 5.0330 7 5.0757 5.7864 6,4632 4.5638 5.7955 6.7282 7,6517 8.5660 7 6.2303 7,0197 6.0021 6.7327 5.3893 5.9713 4.8684 5.3349 8 7.3255 6.2008 5.7466 5.5348 4.9676 4.4873 8 8.1622 7.4353 7.1078 6.5152 9 9 10 6.2469 6,7101 5.9952 6.4177 9.4713 8.9826 6.8017 7.3601 7.8869 8.1109 8.7605 7.7217 8.3064 5.7590 6.1446 6,4951 7.0236 7.4987 10 5.3282 5.6502 5.9327 4.7716 5.0188 5.2332 10.3676 9.7868 7.1390 11 11 12 9.3851 6.1944 5.4206 12 11.2551 12.1337 7.7861 8.5302 9.2526 9.9540 10.6350 11.2961 11.9379 12.5611 10.5753 11.3484 12.1062 8.3838 8.8527 8.8633 9.3936 9,8986 7.9427 8.3577 13 6.8052 7.1607 7.4869 7.7862 9.9856 7.5361 7.9038 8.2442 6.8137 7.1034 7.3667 13 6.4235 6.6282 5.5831 5.7245 14 13.0137 9.2950 8.7455 14 10.5631 11.1184 15 10.3797 9.7122 7.6061 6.8109 5.8474 15 13.8651 14.7179 15.5623 9.1079 9.4466 8.5595 8.8514 8.0607 8.3126 11.6523 10.8378 10.1059 7.8237 6.9740 5.9542 16 17 16 13.1661 10.4773 9.1216 7.1196 17 18 8.5436 8.7556 12.1657 12.6593 13.1339 11.2741 11.6896 12.0853 10.8276 16.3983 17.2260 9.3719 13.7535 14.3238 8.0216 8.2014 8.3649 18 6.0472 6.1280 6.1982 7.2497 7.3658 19 9.6036 8.9501 19 12.8493 13.5777 14.2919 14.9920 15.6785 16.3514 19.5235 22.3965 24.9986 27.3555 11.1581 11.4699 20 14.8775 9.8181 9.1285 8.5136 7.4694 6.2593 20 18.0456 22.0232 25.8077 13.5903 15.6221 12.4622 14.0939 9.7632 10.0591 10.3356 10.5940 11.6536 12.4090 12.9477 13.3317 25 17.4131 7.8431 6,4641 25 10.6748 11.2578 9.0770 9.4269 30 6.5660 17.2920 18.6646 19.6004 21.4872 23.1148 12.7834 13.7648 14.4982 15.0463 9.8226 10.2737 10.5668 10.7574 15.3725 16.3742 17.1591 8.0552 8.1755 35 30 35 29.4086 11.6546 9.6442 6.6166 40 32.8347 19.7928 11.9246 9.7791 8.2438 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 preseni value of $2,000 per year for 10 years assuming an annual interest rate of 9%? For (n = 10,1 = 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 0.4177). Table B.4 Future Value of an Annuity of 1 f=[(1 + i)" - 11/1 Rate 1% % 3% 5% Periods Periods 1 2% 1.0000 4% 1.0000 1.0000 1.00 1 1.0000 2.0100 2 2.0200 2.0300 2.0400 2.0500 2 3 3.0301 3.0604 3.0909 3.1216 3.1525 3 4 4.0604 4.1216 4.2465 4.3101 4 4 4.1836 5.3091 5 5.4163 5.5256 5.1010 6.1520 5 5 5.2040 6.3081 T1199 6.4684 6.8019 6 6 7 7 6.6330 7.8983 7.4343 7.6625 8.1420 7 8 7.2135 8.2857 9.3685 8.5830 9.5491 8 8.8923 10.1591 9.2142 10.5828 9 9.7546 9 10 10.4622 11.566R 10 10.9497 12.1687 11.4639 12.8078 11.0266 12.5779 14.2068 12.0061 13.4864 11 11 12 12.6825 13.4121 14.1920 12 7% 8% 9% 10% 12% 15% 1.000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0000 2.0700 2.0800 2.0900 2.1000 2.1200 2.1500 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 3.4725 4.3746 4.4399 4.S061 4.5731 4.6410 4.7793 4.9934 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.7424 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 8.7537 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 11.0668 9.8975 10.2598 10.6366 11,0285 11.4359 12.2997 13.7268 11.4913 11.9780 12.4876 13,0210 13.5795 14.7757 16.7858 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 14.9716 15.7836 16.6455 17.5603 18.5312 20.6546 24.3493 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 21.0151 22 SSOS 24.2149 26.0192 27.9750 32.3926 40.5047 23.2760 25.1290 27.1921 29.3609 31.7725 37.2797 47 SR04 25.6725 27.8881 30.3243 33,0034 35.9497 42.7533 55.7175 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 33.7600 37-3790 41.4463 46.0185 51.1591 63.4397 88.2118 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 79.0582 94.4608 113.2832 136,3075 164.4940 241.3327 434.7451 111.4348 138.2369 172.3168 215.7108 271.0244431.6635881.1702 154.7620 199.6351 259.0565 337.8824 259.0565 337.8824 442.5926 442.5926 | 767,0914 1.779.0903 13 13.8093 15.6178 15.0258 16.6268 18.2919 20.0236 15.9171 17.7130 19.5986 13 14.6803 15.9739 17.2934 14 14.9474 14 1S 17.0863 18.5989 20.1569 16.0969 17.2579 1S 21.5786 23.6575 16 18.6393 21.8245 16 17 18.4304 19.6147 20.0121 21.4123 22.8406 18 21.7616 23.4144 25.1169 23.6975 25.6454 27,6712 25.8404 28.1324 30.5390 17 18 19 20.8109 19 20 26.8704 33,0660 20 25 22.0190 28.2432 34.7849 25 24.2974 32.0303 40 S6RI 49.9945 60.4020 30 47.7271 66.4388 29.7781 41.6459 56,0849 73.6522 95.0255 30 36.4593 47.5754 60.4621 75.4013 35 41.6603 90.3203 35 40 48.8864 120.7998 40 6 *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 73359). X