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The management of Kunkel Company is considering the purchase of a $40,000 machine that would reduce operating costs by $9,500 per year. At the
The management of Kunkel Company is considering the purchase of a $40,000 machine that would reduce operating costs by $9,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 13% Click here to view Exhibit 12B-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? (1+r) Periods 4% 5% 6% 7% 8% 9% 12% 1 0.962 0.952 0.943 0.935 0.926 0.893 2 0.925 0.907 0.890 0.873 0.857 3 0889 0864 0.840 0.816 0.794 4 0.855 0.823 0.792 0.763 0.735 5 0.822 0,784 0.747 0.713 0.681 6 0.790 0.746 0.705 0.666 0.630 7 0.760 0.711 0.665 0623 0583 0.452 " 0.731 0677 0.627 0.582 0.540 0502 0.467 0434 0404 0.376 0.351 9 0703 0.645 0.592 0.544 | 0.500 | 0.460 0.424 0.391 0361 0.333 0.308 10 0.676 0.614 0558 0.508 0463 0.422 0386 0.352 0322 0.295 0.270 0247 11 0.650 0.385 0527 0.475 0.429 0.388 0.350 0.317 0.287 12 0.625 0.557 0.497 0444 0.397 13 0.601 0.530 0.469 0356 0326 0319 0.231 0.286 0.257 0.204 14 0.577 0.505 0.442 0205 0.181 0.160 15 0.555 0.481 0.417 0.183 0.160 0.140 0123 16 17 18 19 0.277 20 0456 0377 0312 0.258 21 22 23 24 25 0.375 0.295 0.233 0.184 0.146 0.116 0092 26 0361 0.281 0.220 0.172 0135 0.106 27 0.125 0.098 0084 0076 28 29 30 40 20% 19% 18% 17% 15% 16% 14% 13% 10% 11% 0.306 0.840 0.833 0.826 0.820 0.885 0.877 0.862 0.855 0.847 0870 0.917 0909 0.901 0.694 0683 0.672 0.783 0.769 0756 0.743 0.731 0.718 0.706 0.342 0.826 0812 0.797 0537 0524 0609 0.593 0.579 0.564 0351 0.731 0.624 0.712 0.693 0.675 0.658 0.641 0.772 0.751 0.437 0.423 0410 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.708 0.683 0659 0386 0.370 0.355 0.341 0.328 0419 0.402 0.476 0567 0.543 0519 0.456 0437 0.497 0.650 0.621 0593 0275 0.262 0.507 0.480 0.535 0410 0.456 0432 0.390 0.370 0.352 0.335 0319 0.303 0.289 0596 0.564 0.235 0.263 0.249 0.376 0354 0.425 0.400 0333 0314 0.296 | 0.279 0.547 0.513 0.482 0.204 0.191 0.179 0.168 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0144 0.134 0.194 0.180 0.167 0.155 0.263 0243 0.225 0.116 0.137 0.126 0.107 0.176 0.162 0.149 0.227 0.208 0.191 0.112 0.103 0094 0086 0.148 0.135 0.123 0.178 0.195 0.162 0.237 0215 0261 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0.152 0.137 0.208 0.168 0.187 0.104 0.084 0.093 0.075 0.068 0.145 0.130 | 0.116 0290 0.258 0229 0.182 0.163 0415 | 0.368. 0.088 0.099 0.125 0.11 0.141 0.078 0.069 0.062 0.055 0.388 0.340 0.299 0.263 0.232 0045 0.057 0.051 0084 0074 0.065 0.108 0.095 0.239 0.209 0.362 0.315 0.275 0054 0047 0.042 0.036 0.123 0.107 0093 0081 0071 0.062 0534 0458 0.394 0.252 0.218 0.188 0.163 | 0.141 0339 0.292 0.080 0060 0093 0069 0.019 0.052 0.045 0.198 0170 0.146 0.125 0.108 0513 0436 0371 0317 0270 0.231 0.044 0.069 0.059 0.051 0.081 0.038 0.002 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.155 0.130 0.111 0.095 0.043 0.037 0.023 0.031 0.027 0.083 0.070 0.060 0.051 0.164 0.138 0.116 0.098 0475 0396 0331 0.232 0.194 0.087 0073 0.061 0051 0.037 0.043 0026 0.022 0124 0.104 0.031 0.215 0.178 0.149 0022 0.018 0.064 0.053 0.044 0.037 0.031 0.026 0093 0077 0.199 0.164 0.135 0.112 0439 0.359 0.294 0.242 0.083 0068 0056 0.046 0.038 0.032 0.026 0.022 0.018 0015 0.013 0.011 0422 0.342 0.278 0226 0.184 0.150 0.123 0.101 0022 0015 0015 0012 0010 0.009 0.007 0.006 0406 0.326 0262 0.211 0.170 0138 0.112 0.091 0074 0060 0049 0040 0.033 0.006 0015 0010 0008 0.007 0.005 0.043 0.035 0.028 0.019 0.015 0.390 0310 0.347 0.197 0.158 0.126 0.102 0082 0.066 0053 0038 0030 0024 0.020 0074 0059 0.047 0016 0013 0010 0.009 0.007 0006 0.005 0.004 0.009 0.007 0.006 0.005 0.004 0.001 0066 0053 0.042 0033 0.026 0021 0.017 0.014 0.011 0.017 0029 0.025 0.018 0.009 0.007 0014 0011 0.006 0.005 0004 0.003 0.347 0.268 0.207 0.161 0.060 0047 0.042 0.033 0.026 0.020 0016 0012 0010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.333 0.255 0.196 0.150 0.116 0.090 0.069 0.054 0.006 0.005 0.029 0022 0017 0014 0011 0.008 0.004 0.003 0.002 0.002 0.002 0037 0082 0063 0.048 0321 0.243 0.185 0.141 0.107 0.009 0.026 0.020 0015 0012 0007 0.005 0.001 0.004 0.003 0.003 0.002 0.002 0308 0231 0.174 0.131 0.099 0.075 0.057 0.044 0033 0.004 0.003 0.002 0001 0.001 0001 0000 0000 0.000 0.000 0.000 142 0097 0.067 0.046 0.03210022 0.015 0.011 | 0.008 0.005 21% 22% 23% 24% 25% 0.813 0300 0.661 0650 0640 0.512 0222 0.210 0.284 0.209 0061 0.055 0049 0044 0040 0035 0.032 0.014 0.030 0.026 0.023 0.028 0024 0.021 0018 0020 0019 0016 0014 0.028 0017 0014 0.012 0015 0015 0011 0.009 0.009 0.007 0.027 0.021 0.002 Present Value of an Annuity of $1 in Arrears; 1/(1-(1/(1+r)')) Periods 4% 1 5% 6% 0.962 0.952 0.943 2 1.886 1.859 3 9% $% 7% 0.935 0.926 0.917 1.783 1.759 1833 1808 2.775 2.723 2.673 2.624 2577 2.531 10% 13% 4 3.630 3.546 3465 3.387 3312 3240 5 4452 4.329 4.212 4.100 3.993 3.890 6 5.242 5076 4.917 4.767 4.623 4.486 7 6.002 5.786 5.033 6.733 6463 9 7435 7.108 4.946 10 11 8760 12 13 14 15 16 11.652 10.838 10.106 9447 17 12.166 11.274 10.477 9.763 18 12.659 11.690 10 828 19 20 21 22 23 24 25 26 27 28 29 30 16.984 15.141 13 591 12.278 11.158 10.198 9370 8.650 17 292 15.372 13.765 12.409 11.258 10274 9.427 8.694 22% 23% 21% 24% 25% 20% 19% 16% 14% 11% 12 0.806 0.800 0.840 0.833 0.826 0.820 0.813 0.885 0.877 0.870 0.862 0.855 0.847 1440 0.909 0.901 0.893 1509 1492 1474 1457 1.668 1.647 1.626 1.605 1585 1.566 1547 1528 1.736 1.713 1690 2487 2444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2074 2042 2011 1.981 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2494 2448 2.404 2.362 3.170 3.102 3.037 3.058 2.991 2.926 2.864 2.803 2.745 2.689 3.274 3.199 3.127 3433 3.352 3.605 3517 3396 3.791 3.092 3020 2.951 3.784 3.685 3.410 3.326 3.245 3.167 3.998 3.889 3.589 3.498 4.111 4.355 4.231 4039 3,706 3.922 3.812 3.605 3.508 3.416 3327 3.242 3.161) 4.288 4.160 4.868 5.582 5.389 5.2061 4.712 4.564 4423 3518 3421 3329 3.954 3.837 3.726 3619 4.639 4487 4.344 5.146 4.968 4.799 4.207 4.078 6.210 5.971 5.747 5.535 5.335 4.031 4.303 4.163 3.673 3566 3.463) 3.905 3.786 6.802 6315 6.247 5.995 5.359 5537 5.328 5.132 3.799 3.682 3571 4.659 4054 3.923 4.494 4339 4.192 8.111 7.722 7.360 7024 6.710 6418 6.145 5889 5.650 5426 5.216 3.902 3.776 3.656 6207 5.938 5.687 5453 5234 4.836 4.656 4486 4.327 4.177 4.035 3067887 7499 7.139 6.805 6495 4.988 4.793 4.611 4.439 4.278 4.127 3.985 3851 3.725 9.385 863 8.384 7.943 7536 7.161 6.814 6.492 6.194 5918 5.660 5.421 5.197 4533 4362 4.201 4.053 5.342 5.118 4.910 4.715 3912 3780 9.986 9.394 8853 8358 7.904 7487 7.103 6.750 6424 6.122 5842 5583 4.302 4.611 4.432 4.265 4.108 3.962 3.824 10.56) 9899 9.295 8.745 8244 7.786 7367 6982 6.628 6.302 6002 5.724 5.468 5.229 5.008 4.675 4.489 4315 4.153 4001 3.859 6811 6462 6.142 5847 5.575 5.324 5.092 4.876 11.118 10.380 9.712 9.108 559 N061 7.606 7.191 4938 4.730 4536 4357 4.189 4033 3.887 5.668 5.405 5.162 8851 8313 7824 7379 6.974 6.604 6.265 5.954) 3.910 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4576 4391 4.219 4.059 4.312 3.928 7.702 7.250 6.840 6.467 6.128 5818 5.534 5.273 5.033 4.608 4.419 4243 4.080 10 059 9372 8.756 8.201 4.635 4.442 4.263 4097 3942 13.134 12.085 11.158 10.336 9.604 950 8365 7839 7.366 6938 6.550 6.198 5877 5584 5.316 5.070 4.843 6.259 5.929 5628 5.353 5.301 4.870 4.657 4.460 4279 4.110 3.954 13.590 12.462 11.470 10.594 9818 9.129 8514 7963 7.469 7.025 6623 4.675 6.687 6312 5973 5.665 5384 5.127 4.891 4.476 4.292 4.121 3.963 8075 7562 7.102 14.029 12.821 11.764 10.836 10.017 9.292 8649 5.696 5410 5.149 4909 4.690 4.488 4.302 4.130 | 3970 14451 13.163 12.042 11.061 10 201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6011 6.044 5.723 5432 5.167 4925 4.703 4499 4311 4.137 3.976 14.857 13.489 12.303 11.272 10.371 9.580 88838266 7.718 7.230 6.792 6.399 8.985 8.348 7.784 7.283 6.835 6434 6073 5.746 5451 5.182 4937 4.713 4507 4.318 4.143 3.981 15.247 13.799 12.550 11.469 10.529 9.707 6.464 6097 5.766 5.467 5395 4948 4.721 4314 4.323 4.147 3.985 15.622 14 094 12.783 11.654 10.675 9823 9077 8422 7.843 7.330 6873 3988 5.206 4.956 4.728 4520 4328 4.151 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8488 78967372 6.906 6491 6.118 5.783 5480 4.964 4734 4524 4.332 4.154 3990 16.330 14.643 13.211 11.987 10.935 10027 9.237 8548 7.943 7409 6935 6514 6.136 5.798 5492 5.215 7.984 7.441 6.961 6534 6.152 5810 5.502 5.223 4970 4.239 4528 4.335 4.157 3.992 16.663 14.898 13.406 12.137 11.051 10.116 9.3078.602 8.022 7.470 6.983 6551 6.166 5820 5510 5.229 4.975 4.743 4.337 4.159 3.994 3995 8.055 7.496 7.003 6.566 6.177 5.829 5517 5235 4.979 4.746 4.534 4.339 4.160 15% 17% 18% 1952 4.772 4.607 4451 5019 4.833 5.029 4.531
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