SOLVE FOR PART C!!!!
Appendix A:
Appendix C:
Investments Quick and Slow cost $800 each, are mutually exclusive, and have the following cash flows. The firms cost of capital is 6 percent.
| | Cash Inflows |
| | Q | S |
| Year 1 | | $1,000 | | $275 | |
| 2 | | | | 275 | |
| 3 | | | | 275 | |
| 4 | | | | 275 | |
- According to the net present value method of capital budgeting, which investment(s) should the firm make? Use Appendix B and Appendix D to answer the question. Use a minus sign to enter negative values, if any. Round your answers to the nearest cent.
NPV (Investment Quick): $143.40
NPV (Investment Slow): $152.90
- According to the internal rate of return method of capital budgeting, which investment(s) should the firm make? Use Appendix D to answer the question. Round your answers to the nearest whole number.
IRR (Investment Quick): 25%
IRR (Investment Slow): 14%
- If Q is chosen, the $1,000 can be reinvested and earn 8 percent. Does this information alter your conclusions concerning investing in Q and S? To answer, assume that Ss cash flows can be reinvested at its internal rate of return. Use the rounded internal rate of return from part b. Use Appendix A and Appendix C to answer the question. Round your answers to the nearest cent.
Terminal value (Investment Quick): $____________?
Terminal value (Investment Slow): $___________?
Would your answer be different if Ss cash flows were reinvested at the cost of capital (6 percent)? Use Appendix C to answer the question. Round your answer to the nearest cent.
Terminal value (Investment Slow): $___________?
Interest Factors for the Future Value of One Dollar Time Period (e.g. year 2 3 1% 1.010 1.020 1.030 1.041 1.051 2% 3% 1.020 1.030 1.040 1.061 1.061 1.093 1.082 1.126 1.104 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.102 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 7% 1.070 1.145 1.225 1.311 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 1.090 1.188 1.295 1.412 1.539 10% 1.100 1.210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 15% 1.150 1.322 1.521 1.749 2.011 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 6 1.062 1.126 1.072 1.149 1.083 1.172 1.094 1.195 1.105 1.219 1.194 1.265 1.230 1.316 1.267 1.369 1.305 1.423 1.344 1.480 1.340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.587 1.714 1.851 1.999 2.159 1.677 1.828 1.993 2.172 2.367 1.772 1.949 2.144 2.358 2.594 1974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3.252 3.707 2.313 2.660 3.059 3.518 4.046 2.436 2.826 3.278 3.803 4.411 2.700 3.186 3.759 4.436 5.234 2.986 3.583 4.300 5.160 6.192 11 1.116 1.127 1.243 1.268 1.384 1.426 1.539 1.710 1.601 1.796 1.886 1.732 1.980 1.801 2.079 1.898 2.012 2.133 2.261 2.397 2.1052.332 2.252 2.518 2.410 2.720 2.579 2.937 2.759 3.172 2.580 2.813 3.066 3.342 3.642 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 4.652 5.117 5.350 5.936 6.153 6.886 .076 7.988 8.1379.266 6.176 7.287 8.599 10.147 11.973 7.430 8.916 10.699 12.839 15.407 7 14 15 1.149 1.161 1.319 1.346 1.513 1.558 16 17 1.173 1.184 1.196 1.208 1.220 1.373 1.400 1.428 1.457 1.486 1.605 1.873 2.183 2.540 2.952 1.653 1.948 2.292 2.693 3.159 1.702 2.026 2.407 2.854 3.380 1.754 2.107 2.527 3.026 3.617 1.806 2.191 2.653 3.207 3.870 3.426 3.700 3.996 4.316 4.661 3.970 4.328 4.717 5.142 5.604 4.595 5.054 5.560 6.116 6.728 6.130 6.866 7.690 8.613 9.646 8.137 9.276 10.575 12.056 13.743 9.358 10.761 12.375 14.232 16.367 10.748 12.468 14.463 16.777 19.461 4.129 16.672 19.673 23.214 27.393 18.488 22.186 26.623 31.948 38.337 19 20 25 30 1.282 1.641 2.094 2.666 3.386 4.292 5.427 1.348 1.811 2.427 3.243 4.322 5.743 7.612 6.848 8.623 10.063 13.268 10.835 17.000 26.462 17.449 29.960 50.950 32.919 40.874 66.212 85.850 62.688 95.396 143.370 237.370 Interest Factors for the Future Value of an Annuity of One Dollar Time Period (e.g., year 1 1% 1.000 2.010 3.030 .060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 5% 1.000 2.050 3.152 4.3104 5.526 6% 1.000 2.060 3.184 .375 5.637 7% 1.000 2.070 3.215 4.440 5.751 8% 1.000 2.080 3.246 4.506 5.867 9% 1.000 2.090 3.278 4.573 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.770 6.353 14% 16% 1.000 1.000 2.140 2.160 3.440 3.506 4.9215 .067 6.610 6.877 20% 1.000 2.200 3.640 5.368 7.442 4 4 6.152 7.214 8.286 9.369 10.462 6.308 7.434 8.583 9.755 10.950 6.468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 6.975 8.394 9.897 11.491 13.181 7.153 8.654 10.260 11.978 13.816 7.336 8.923 10.637 12.488 14.487 7.523 7.716 9.2009 .487 11.028 11.436 13.021 13.579 15.193 15.937 8.115 10.089 12.300 14.776 17.549 8.536 10.730 13.233 16.085 19.337 8.978 9.930 11.413 12.915 14.240 16.499 17.518 20.798 21.321 25.958 10 11 12 11.567 12.683 13.809 14.947 16.097 12.169 12.808 13.412 14.192 14.680 15.618 15.974 17.086 17.29318.599 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 14.972 16.870 18.882 21.051 23.276 15.784 17.888 20.141 22.550 25.129 16.645 18.977 21.495 24.215 27.152 17.560 20.141 22.953 26.019 29.361 18.531 21.384 24.523 27.975 31.772 20.655 24.138 28.029 32.393 37.280 23.044 27.271 32.089 37.581 43.842 25.732 30.850 36.786 43.672 51.659 32.150 39.580 48.496 59.195 72.035 14 16 17 17.25818.639 18.430 20.012 19.615 21.412 18 19 20.157 21.762 23.414 5.117 26.870 21.825 23.698 25.645 27.671 29.778 23.657 25.673 25.840 28.213 28.132 30.906 30.53933.760 33.066 36.786 27.888 30.840 33.999 37.379 40.995 30.324 33.750 37.450 41.446 45.762 33.003 36.974 41.301 46.018 51.160 35.950 42.753 50.980 40.545 48.884 59.118 45.599 55.750 68.934 51.15963.440 78.969 57.275 72.05291.025 60.925 87.442 71.673 105.93 84.140 128.11 98.603 154.74 115.370 186.68 20 22.019 24.297 25 28.243 32.030 36.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 133.33 181.87 249.210 471.98 30 34.785 40.568 47.575 56.085 66.439 79.058 94.461 113.283 136.308 164.494 241.333 356.878 530.310 1181.8 Interest Factors for the Future Value of One Dollar Time Period (e.g. year 2 3 1% 1.010 1.020 1.030 1.041 1.051 2% 3% 1.020 1.030 1.040 1.061 1.061 1.093 1.082 1.126 1.104 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.102 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 7% 1.070 1.145 1.225 1.311 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 1.090 1.188 1.295 1.412 1.539 10% 1.100 1.210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 15% 1.150 1.322 1.521 1.749 2.011 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 6 1.062 1.126 1.072 1.149 1.083 1.172 1.094 1.195 1.105 1.219 1.194 1.265 1.230 1.316 1.267 1.369 1.305 1.423 1.344 1.480 1.340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.501 1.606 1.718 1.838 1.967 1.587 1.714 1.851 1.999 2.159 1.677 1.828 1.993 2.172 2.367 1.772 1.949 2.144 2.358 2.594 1974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3.252 3.707 2.313 2.660 3.059 3.518 4.046 2.436 2.826 3.278 3.803 4.411 2.700 3.186 3.759 4.436 5.234 2.986 3.583 4.300 5.160 6.192 11 1.116 1.127 1.243 1.268 1.384 1.426 1.539 1.710 1.601 1.796 1.886 1.732 1.980 1.801 2.079 1.898 2.012 2.133 2.261 2.397 2.1052.332 2.252 2.518 2.410 2.720 2.579 2.937 2.759 3.172 2.580 2.813 3.066 3.342 3.642 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 4.652 5.117 5.350 5.936 6.153 6.886 .076 7.988 8.1379.266 6.176 7.287 8.599 10.147 11.973 7.430 8.916 10.699 12.839 15.407 7 14 15 1.149 1.161 1.319 1.346 1.513 1.558 16 17 1.173 1.184 1.196 1.208 1.220 1.373 1.400 1.428 1.457 1.486 1.605 1.873 2.183 2.540 2.952 1.653 1.948 2.292 2.693 3.159 1.702 2.026 2.407 2.854 3.380 1.754 2.107 2.527 3.026 3.617 1.806 2.191 2.653 3.207 3.870 3.426 3.700 3.996 4.316 4.661 3.970 4.328 4.717 5.142 5.604 4.595 5.054 5.560 6.116 6.728 6.130 6.866 7.690 8.613 9.646 8.137 9.276 10.575 12.056 13.743 9.358 10.761 12.375 14.232 16.367 10.748 12.468 14.463 16.777 19.461 4.129 16.672 19.673 23.214 27.393 18.488 22.186 26.623 31.948 38.337 19 20 25 30 1.282 1.641 2.094 2.666 3.386 4.292 5.427 1.348 1.811 2.427 3.243 4.322 5.743 7.612 6.848 8.623 10.063 13.268 10.835 17.000 26.462 17.449 29.960 50.950 32.919 40.874 66.212 85.850 62.688 95.396 143.370 237.370 Interest Factors for the Future Value of an Annuity of One Dollar Time Period (e.g., year 1 1% 1.000 2.010 3.030 .060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 5% 1.000 2.050 3.152 4.3104 5.526 6% 1.000 2.060 3.184 .375 5.637 7% 1.000 2.070 3.215 4.440 5.751 8% 1.000 2.080 3.246 4.506 5.867 9% 1.000 2.090 3.278 4.573 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.770 6.353 14% 16% 1.000 1.000 2.140 2.160 3.440 3.506 4.9215 .067 6.610 6.877 20% 1.000 2.200 3.640 5.368 7.442 4 4 6.152 7.214 8.286 9.369 10.462 6.308 7.434 8.583 9.755 10.950 6.468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 6.975 8.394 9.897 11.491 13.181 7.153 8.654 10.260 11.978 13.816 7.336 8.923 10.637 12.488 14.487 7.523 7.716 9.2009 .487 11.028 11.436 13.021 13.579 15.193 15.937 8.115 10.089 12.300 14.776 17.549 8.536 10.730 13.233 16.085 19.337 8.978 9.930 11.413 12.915 14.240 16.499 17.518 20.798 21.321 25.958 10 11 12 11.567 12.683 13.809 14.947 16.097 12.169 12.808 13.412 14.192 14.680 15.618 15.974 17.086 17.29318.599 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 14.972 16.870 18.882 21.051 23.276 15.784 17.888 20.141 22.550 25.129 16.645 18.977 21.495 24.215 27.152 17.560 20.141 22.953 26.019 29.361 18.531 21.384 24.523 27.975 31.772 20.655 24.138 28.029 32.393 37.280 23.044 27.271 32.089 37.581 43.842 25.732 30.850 36.786 43.672 51.659 32.150 39.580 48.496 59.195 72.035 14 16 17 17.25818.639 18.430 20.012 19.615 21.412 18 19 20.157 21.762 23.414 5.117 26.870 21.825 23.698 25.645 27.671 29.778 23.657 25.673 25.840 28.213 28.132 30.906 30.53933.760 33.066 36.786 27.888 30.840 33.999 37.379 40.995 30.324 33.750 37.450 41.446 45.762 33.003 36.974 41.301 46.018 51.160 35.950 42.753 50.980 40.545 48.884 59.118 45.599 55.750 68.934 51.15963.440 78.969 57.275 72.05291.025 60.925 87.442 71.673 105.93 84.140 128.11 98.603 154.74 115.370 186.68 20 22.019 24.297 25 28.243 32.030 36.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 133.33 181.87 249.210 471.98 30 34.785 40.568 47.575 56.085 66.439 79.058 94.461 113.283 136.308 164.494 241.333 356.878 530.310 1181.8
