The chief ranger of the state's Department of Natural Resources is considering a new plan for fighting forest fires in the state's forest lands. The current plan uses eight fire-control stations, which are scattered throughout the interior of the state forest. Each station has a four-person staff, whose annual compensation totals $390,000. Other costs of operating each base amount to $290,000 per year. The equipment at each base has a current salvage value of $310,000. The buildings at these interior stations have no other use. To demolish them would cost $29,000 each. The chief ranger is considering an alternative plan, which involves four fire-control stations located on the perimeter of the state forest. Each station would require a six-person staff, with annual compensation costs of $490,000. Other operating costs would be $300,000 per base. Building each perimeter station would cost $390,000. The perimeter bases would need helicopters and other equipment costing $690,000 per station. Half of the equipment from the interior stations could be used at the perimeter stations. Therefore, only half of the equipment at the interior stations would be sold if the perimeter stations were built. The state uses a 10 percent hurdle rate for all capital projects. The chief ranger has decided to use a 15-year time period for the analysis. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Use the incremental-cost approach to prepare a net-present-value analysis of the chief ranger's decision between the interior fire- control plan and the perimeter fire-control plan. (Round your final answers to the nearest whole dollar.) Difference in NPV Costs Future Value and Present Value Tables Table I Future Value of $1.00(1+r)^ Period 4% 6% 8% 10% 12% 14% 20% 1 1.040 1.060 1.080 1.100 1.120 1.140 1.200 2 1.082 1.124 1.166 1.210 1.254 1.300 1.440 3 1.125 1.191 1.260 1.331 1.405 1.482 1.728 4 1.170 1.263 1.361 1.464 1.574 1.689 2.074 5 1.217 1.338 1.469 1.611 1.762 1.925 2.488 6 1.265 1.419 1.587 1.772 1.974 2.195 2.986 7 1.316 1.504 1.714 1.949 2.211 2.502 3.583 8 1.369 1.594 1.851 2.144 2.476 2.853 4.300 9 1.423 1.690 1.999 2.359 2.773 3.252 5.160 10 1.480 1.791 2.159 2.594 3.106 3.707 6.192 11 1.540 1.898 2.332 2.853 3.479 4.226 7.430 12 1.601 2.012 2.518 3.139 3.896 4.818 8.916 13 1.665 2.133 2.720 3.452 4.364 5.492 10.699 14 1.732 2.261 2.937 3.798 4.887 6.261 12.839 15 1.801 2.397 3.172 4.177 5.474 7.138 15.407 20 2.191 3.207 4.661 6.728 9.646 13.743 38.338 30 3.243 5.744 10.063 17.450 29.960 50.950 237.380 40 4.801 10.286 21.725 45.260 93.051 188.880 1,469.800 Table II (1 + r)" - 1 Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) r Period 4% 6% 8% 10% 12% 14% 20% 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.060 2.080 2.100 2.120 2.140 2.220 3 3.122 3.184 3.246 3.310 3.374 3.440 3.640 4 4.247 4.375 4.506 4.641 4.779 4.921 5.368 5 5.416 5.637 5.867 6.105 6.353 6.610 7.442 9 6.633 6.975 7.336 7.716 8.115 8.536 9.930 7 7.898 8.394 8.923 9.487 10.089 10.730 12.916 8 9.214 9.898 10.637 11.436 12.300 13.233 16.499 9 10.583 11.491 12.488 13.580 14.776 16.085 20.799 10 12.006 13.181 14.487 15.938 17.549 19.337 25.959 11 13.486 14.972 16.646 18.531 20.655 23.045 32.150 13.486 14.972 16.646 18.531 20.655 23.045 32.150 12 15.026 16.870 18.977 21.385 24.133 27.271 39.580 13 16.627 18.882 21.495 24.523 28.029 32.089 48.497 14 18.292 21.015 24.215 27.976 32.393 37.581 59.196 15 20.024 23.276 27.152 31.773 37.280 43.842 72.035 20 29.778 36.778 45.762 57.276 75.052 91.025 186.690 30 56.085 79.058 113.283 164.496 40 356.790 1,181.900 95.026 154.762 259.057 442.597 767.090 1,342.000 7.343.900 241.330 Table III 1 Present Value of $1.00 (1 + r)" Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 1 .962 .943 .926 2 .925 .890 .857 .909 .826 .797 .893 .877 .769 .862 .847 .833 .743 .718 .694 .820 .672 .806 .794 .781 .769 .758 .650 .630 .610 .592 .574 3 .889 .840 .794 .751 .712 .675 .641 .609 .579 .551 .524 .500 .477 .455 .435 4 .855 .792 .735 .683 .636 .592 .552 .516 .482 .451 .423 .397 .373 .350 .329 5 .822 .747 .681 .621 .567 .519 .476 .437 .402 .370 .341 .315 .291 .269 .250 19 6 .790 .705 .630 .564 .507 .456 .410 .370 .335 .303 .275 .250 .227 .207 .189 7 .760 .665 .583 .513 .452 .400 .354 .314 .279 .249 .222 .198 .178 .159 .143 8 .731 .627 .540 .467 .404 .351 .305 .266 .233 .204 .179 .157 .139 .123 .108 9 .703 .592 .500 .424 .361 .308 .263 .225 .194 .167 .144 .125 .108 .094 .082 10 .676 .558 .463 .386 .322 .270 .227 .191 .162 .137 .116 .099 .085 .073 .062 11 .650 .527 .429 .350 .287 .237 .195 .162 .135 .112 .094 .079 .066 .056 .047 15 2242 12 .625 .497 .397 .319 13 .601 .469 .368 .290 .229 .182 .145 .116 .257 .208 .168 .137 .112 .092 .075 .093 14 .577 .442 340 .263 .205 .160 .125 .099 .078 .555 .417 .315 .239 .183 .140 .108 .084 .065 .051 .062 .049 .039 .031 .076 .062 .052 .043 .061 .050 .040 .033 .032 .025 .036 .027 .021 .040 .025 .020 .016 40 224 20 .456 .312 .215 .149 .104 .073 .051 .037 .026 30 .308 .174 .099 .057 .033 .020 .012 .007 .004 .019 .014 .010 .007 .005 .003 .002 .001 .001 .004 .208 .097 .046 .022 .011 .005 .003 .001 .001 Table IV Present Value of Series of $1.00 Cash Flows 1 (1) Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30% 1 0.962 0.943 0.926 0.909 0.893 2 1.886 1.833 1.783 3 2.775 2.673 2.577 1.736 2.487 4 3.630 3.465 3.312 5 4.452 4.212 3.993 3.791 0.877 0.862 1.690 1.647 1.605 2.402 2.322 2.246 3.170 3.037 2.914 2.798 3.605 3.433 3.274 3.127 2.991 2.864 0.847 0.833 0.820 0.806 0.800 0.794 0.781 0.769 1.566 1.528 1.492 1.457 1.440 1.424 1.392 1.361 2.174 2.106 2.042 1.981 1.952 1.923 1.868 1.816 2.690 2.589 2.494 2.404 2.362 2.320 2.241 2.166 2.745 2.689 2.635 2.532 2.436 679 5.242 4.917 4.623 3.889 3.685 3.498 3.326 3.167 3.020 6.002 5.582 6.733 6.210 9 7.435 6.802 5.206 4.868 5.747 5.335 6.247 5.759 10 8.111 7.360 6.710 6.145 4.355 4.111 2.951 2.885 2.759 2.643 4.564 4.288 4.039 3.812 3.605 3.416 3.242 3.161 3.083 2.937 2.802 4.968 4.639 4.344 4.078 3.837 3.619 3.421 3.329 3.241 3.076 2.925 5.328 4.946 4.607 4.303 4.031 3.786 3.566 3.463 3.366 3.184 3.019 5.650 5.216 4.833 4.494 4.192 3.923 3.682 3.571 3.465 3.269 3.092 11 8.760 7.887 7.139 6.495 5.938 5.453 12 13 14 15 2345 9.385 8.384 7.536 6.814 6.194 5.660 9.986 8.853 7.904 7.103 6.424 5.842 10.563 9.295 8.244 7.367 6.628 11.118 9.712 8.559 7.606 6.811 5.575 5.092 4.675 5.029 4.656 4.327 4.035 3.776 3.656 3.544 3.335 3.147 5.197 4.793 4.439 4.127 3.851 3.725 3.606 3.387 3.190 5.342 4.910 4.533 4.203 3.912 6.002 5.468 5.008 4.611 4.265 3.962 6.142 4.315 4.001 3.780 3.656 3.427 3.223 3.824 3.695 3.459 3.249 3.859 3.726 3.483 3.268 20 30 40 239 13.590 11.470 17.292 19.793 15.046 11.925 9.818 8.514 7.469 13.765 11.258 9.427 8.055 9.779 8.244 6.623 5.929 5.353 7.003 6.177 5.517 7.105 6.234 5.548 4.166 3.999 4.870 4.460 4.110 3.954 3.808 3.546 4.979 4.534 4.160 3.995 3.842 3.569 4.997 4.544 3.316 3.332 3.846 3.571 3.333