TABLE 3 Present Value of 1 When using Table 3, the future value is multiplied by the present value factor specified at the intersection of the number of periods and the discount rate. For example, the present value factor for one period at a discount rate of 10% is .90909 , which equals the $909.09($1,000.90909) computed in For two periods at a discount rate of 10%, the present value factor is .82645 , which equals the $826.45($1,000.82645) computed previously. $909.09, a difference of $288.17. The following two demonstration problems (Illustrations G-12 and G-13) illustrate how to use Table 3 . Suppose you have a winning lottery ticket and the state gives you the option of taking $10,0003 years from now or taking the present value of $10,000 now. The state uses an 8% rate in discounting. How much will you receive if you accept your winnings now? ILLUSTRATION G-15 Present value of a series of future amounts computation annuity table shows the present value of 1 to be received periodically for a given number of payments. It assumes that each payment is made at the end of each period. TABLE 4 Present Value of an Annuity of 1 BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Click here to view PV table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg - 45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Which machine should be purchased