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 $380,000. Other costs of operating each base amount to $280,000 per year. The equipment at each base has a current salvage value of $300,000. The buildings at these interior stations have no other use. To demolish them would cost $28,000 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 $480,000. Other operating costs would be $290,000 per base. Building each perimeter station would cost $380,000. The perimeter bases would need helicopters and other equipment costing $680,000 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 10-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 "Discount factors" to 3 decimal places. Negative amounts should be indicated by a minus sign.) Net present value Interior stations/Perimeter stations Table I 6% 10% 20% Period 4% 12% 14% Future Value of $1.00(1 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 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 2.159 10 1.480 1,791 2.594 3.106 3.707 6.192 11 1.540 1.898 2.332 2.853 3.479 4.226 7.430 4.818 12 1.601 2.012 2,518 3.139 3.896 8.916 10.699 13 1,665 2.133 2,720 3.452 4,364 5.492 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 93.051 4,801 10.286 21.725 45.260 188.880 1,469.800 Table II Period 4% 6% 8% 10% 12% 14% 20% Future Value of a Series of 1 1,000 1.000 1.000 1.000 1.000 1.000 1.000 $1.00 Cash Flows (Ordinary Annuity) (1n 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 6 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 9.898 8 9.214 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 21.385 12 15.026 16.870 18.977 24.133 27.271 39.580 13 16.627 18,882 21.495 24.523 28.029 32.089 48.497 24.215 32.393 14 18.292 21.015 27.976 37.581 59.196 27.152 15 20.024 23.276 31.773 37.280 43.842 72.035 91.025 20 29.778 36.778 45.762 57.276 75.052 186,690 356.790 1,181.900 30 56,085 79,058 113.283 164.496 241.330 40 95.026 154.762 259.057 442.597 767.090 1,342.000 7,343.900 91% LO. Table III Present Value of $1.00 1 (1 10 % 28% 4% Period 6% 8% 12% 14% 16% 18% 20% 22% 24% 26% 30% 32% 1 .962 943 .926 .909 .893 .877 .862 847 833 820 .806 794 781 .769 758 769 694 2 .925 890 857 826 .797 743 718 672 .650 .630 .610 .592 .574 889 840 794 751 712 .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 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 .159 143 731 627 .139 8 540 467 .404 351 305 266 233 204 .179 157 .123 .108 703 592 500 424 361 308 263 225 194 .167 144 125 108 .094 .082 10 676 558 463 386 322 270 227 191 .162 137 .116 .099 085 073 .062 350 11 .650 527 429 287 237 195 .162 .135 .112 .094 .079 066 056 .047 12 625 497 397 319 257 .208 168 137 .112 092 .076 ,062 052 043 .036 13 .601 469 368 .290 229 .182 145 116 093 075 .061 .050 040 .033 027 14 .577 442 340 263 205 160 .125 ,099 078 062 .049 039 032 025 021 15 555 417 315 239 .183 .140 108 .084 065 051 040 .031 025 020 .016 20 456 312 215 .149 .104 .073 .051 .037 026 .019 ,014 .010 007 005 .004 004 .001 30 308 174 .099 .057 .033 020 012 .007 003 .002 .001 40 208 097 ,046 022 .011 .005 003 .001 001 Table IV Present Value of Series of $1.00 Cash Flows 1 1 (1 r 8% Period 4% 6% 10% 12% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30% 1 0.962 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.820 0.806 0.800 0.794 0.781 0.769 1,736 1.528 1.457 2 1,886 1.833 1.783 1.690 1.647 1,605 1.566 1.492 1.440 1.424 1.392 1.361 3 2.775 2,673 2.577 2,487 2,402 2,322 2.246 2,174 2,106 2,042 1,981 1.952 1.923 1.868 1.816 4 3,630 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 2,494 2.404 2.362 2.320 2.241 2.166 5 4,452 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 2.864 2.745 2.689 2.635 2.532 2.436 6 5.242 4,917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 3.167 3.020 2,951 2,885 2.759 2,643 7 6.002 5.582 5.206 4.868 4,564 4,288 4.039 3.812 3.605 3.416 3.242 3.161 3,083 2.937 2,802 8 6,733 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3,837 3.619 3.421 3.329 3,241 3.076 2.925 7.435 6.802 6,247 5.759 5.328 4,946 4.607 4.303 4,031 3.786 3,566 3,463 3,366 3.184 3,019 10 8.111 7,360 6.710 6.145 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 5.029 4.656 4,327 4.035 3.776 3.656 3.544 3.335 3.147 12 9.385 8.384 7,536 6.814 6.194 5,660 5.197 4,793 4.439 4,127 3.851 3.725 3.606 3.387 3.190 13 9.986 8.853 7.904 7.103 6.424 5,842 5.342 4,910 4.533 4.203 3.912 3.780 3.656 3.427 3.223 7.367 14 10.563 9.295 8.244 6.628 6.002 5.468 5.008 4.611 4,265 3.962 3.824 3.695 3.459 3.249 15 11.118 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 4.315 4.001 3.859 3.726 3.483 3.268 20 13.590 11.470 9,818 8.514 7.469 6,623 5.929 5.353 4,870 4.460 4.110 3.954 3,808 3.546 3.316 30 17.292 13.765 11.258 9.427 8.055 7.003 6.177 5.517 4.979 4,534 4,160 3.995 3.842 3.569 3.332 40 19.793 15,046 11.925 9.779 8.244 7.105 6.234 5.548 4.997 4,544 4.166 3,999 3.846 3.571 3.333 co C