The management of Kunkel Company is considering the purchase of a $20,000 machine that would reduce operating costs by $5,000 per year. At the end of the machines five-year useful life, it will have zero salvage value. The companys required rate of return is 13%. Click here to view Exhibit 12B-1 and Exhibit 12B-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?

EXHIBIT 120-1 1 Present Value of $1; ((1 + r))" 0.713 0.681 0.650 0.543 0.519 0.476 0.746 0.099 Periods 4% % 5% 1 0.962 0.952 2 0.925 0.907 3 0.889 0.864 4 0.855 0.823 5 0.822 0.784 6 0.790 7 0.760 V.ro 0.711 8 0.731 0.677 9 0.703 din 0.645 10 0.676 0.614 11 0.650 0.585 12 0.625 0.557 13 0.001 0.530 14 0.577 0.505 TE 15 0.555 0.481 16 0.534 0.458 17 0.513 0.436 1.4.30 WS 18 0.494 0494 0.416 19 0.475 0.396 V.370 20 0.456 Vio 0.377 21 0.439 0.359 22 0.422 0.342 23 0.406 0.326 24 0.390 0.310 25 0.375 0.295 26 0.361 0.281 27 0.347 0.268 28 0.333 0.255 29 0.321 0.243 30 0.308 0.231 40 0.208 0.142 6% 7% 8% 9% 10% 11% 12% 13% 14% % 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.943 0.935 0.926 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.862 0.855 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.661 0.650 0.640 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.792 0.763 0.735 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 1 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.747 0.621 0.593 0.567 0.497 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.90 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0.262 0.665 0.623 0.583 0.022 0547 0.513 0.482 0.452 0.425 Vitae 0.400 0.376 0.354 0.333 0.314 0.296 V.214 0.279 0.263 0.249 0.235 0.222 0.210 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 Videa V.214 0.351 0327 0.305 0.266 0.285 0.249 0.233 0.218 0.204 0.191 0.179 0.168 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 2004 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 0.558 0.508 0.463 0.422 0.386 0.386 0.352 0.322 0.295 0.295 0.270 0.247 0.227 0.208 10 . Vilm 0.191 . 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 . 0.162 0.148 20 0.135 0.123 0.112 0.103 0.094 0.497 0.086 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0.469 0.415 0.368 0.326 0.290 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.116 0.104 0.104 | 0.093 0.084 0.075 0.068 0.061 0.055 0.442 0 300 0.340 0.299 0.263 0.232 0.205 0.181 1601 0.160 0.141 0.125 0.111 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 0.394 0.339 0.292 0.252 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.170 0.146 0.125 0.108 0.093 0.069 W.060 0.060 0.052 0.052 0.045 0.039 9.04. 0.0.59 0.034 0026 0023 0.350 0.030 17.30 0.296 0.250 0.212 0.250 0.212 0.180 0.153 0.130 0.130 0.111 0.095 0.081 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 V.04 0.331 0.018 0.232 0.194 0.164 1 0.138 V22 V.010 0.21 0.232 0.194 0.116 V.130 0.098 0.083 0.070 0.060 0.051 | 0.043 wany ware 0.037 WAB 0.031 W.112 0.027 0.312 0.258 0.020 9.03 0.023 0.215 VND 0.014 0.017 0.178 0.149 0.124 0.104 0.087 0.073 Marcu 0.073 0.061 0.051 am 0.1 0.043 0.037 Vam 0.031 0.026 0.022 0.019 0.016 0.014 0.012 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0.077 0.077 0.064 WO 0.064 0.053 WAV 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 | 0,009 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0,060 0.049 0.0140 0.033 0.027 0.022 0.018 0,015 0.012 0.010 0.009 0.007 0.006 0.247 0.197 0.158 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030) 0.024 0.020 0.016 0.013 0.010 0.009 0.0X7 0.006 0.005 0.004 0.220 0.172 0.135 0.106 0.084 0.066 1 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.207 0.161 0.125 0.098 0.098 0.076 0.076 0.060 0.060 | 0.047 0.037 1 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.196 0.150 0.116 0.090) 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.012 0.012 | 0.010 0.008 0.006 0.005 0.0X14 0.003 0.002 0.002 0.185 0.141 0.107 0.107 0.082 0.063 0.063 0.048 0.048 0,037 0,029 0.022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.026 0,020 0.015 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.003 0.002 0.002 0.001 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 ) 0.00 0.000 0.000 0.000 0.218 0.080 0.069 0.059 0.038 0.032 EXHIBIT 12B-2 Present Value of an Annuity of $1 in Arrears; 1/(1-(1/(1+r)^n)) 6,802 Periods 1 2 3 4 5 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 5% 6% 7% 8% 9% 10% 11% 12% % 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% % 0.962 0.952 0.943 0.935 0.926 0,917 0.909 0.901 0.893 0.885 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.833 0.826 0.820 0.813 0.806 0.800 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2.074 2,042 2,011 1.981 1.952 3,630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 | 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2.540 2.494 2.448 2.404 2.362 4.452 4.329 4.212 4.10) 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 5.2425.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 2400 3.889 3.784 3.685 3.589 3.498 600 3.410 3.326 3.245 3.167 3.092 3,020 2.951 6.002 5.786 5.582 5.389 5.206 5020 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 2605 3.605 3.508 3.416 3.327 2240 3.242 2161 3.161 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 | 3.954 3.837 3726 3.726 3.619 3.518 3.421 3.329 7.435 7.108 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 8.111 7.722 7.360) 7.024 6.710 0.418 6.418 6.145 5.889 - ' 23.00 5.650 2.426 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 7123 4.054 3.923 7.129 3.799 3.682 3.571 8.306 8.760 7.887 0.JVD 0.700 1.007 7.499 1.499 2.27 7.139 7.139 6.805 0.003 6.495 6.207 5.938 0.93 Vad 3.936 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 2.00 3.656 8.863 9.385 3.776 7.943 8.384 7.302 0.003 1230 7.536 7.161 6.814 6.492 6.194 5.918 10 0.199 0.019 0.94 5.660 5.421 w710 5.197 4.988 4.793 4.611 4.439 4.278 4.127 3.985 9.986 9.394 3.851 8.853 3.725 no 8.358 TO 1439 1.121 7.487 7.904 2017 7.103 6.750 MAN 6.424 2.12 6.122 5.842 Siam ta 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 10.563 9.899 9.295 8.745 8.244 7.786 7.367 Vio 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4.432 4.265 4.108 3.962 3.824 11.118 10.380 | 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 S $75 5.324 5.092 4.876 4.675 4.489 4.315 4.1534.001 3.859 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 12.166 11.274 10.477 9.763 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 4.576 4.391 4.2194,059 3.910 12.659 11.690 10.828 10.0599.372 8.756 8.201 7.702 7.250 6.840 6.467 6.467 6.128 5.818 S.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 13.134 12.085 11.158 10.336 9,604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 44424.263 4.097 3.942 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 | 5.127 4.891 4.675 4.476 4.292 4.121 3.963 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4./05 4.499 4.311 4.137 3.976 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6,434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.8437.330 *.112 6.873 6.464 6.097 5.766 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.147 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 7.17 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 3.990 16.663 14.898 13.406 12.137 11.051 10.116 9307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 16.984 15.141 13.591 12.278 11.158 10.198 | 9.370 8.650 8.022 7.470 6.983 6.551 6.166 5.820 5.510 5.229 4.975 4.743 4.531 4.337 4.159 3.994 17.292 15.372 13.765 12.409 11.258 10.2749.427 8.694 8.055 7.496 7.003 6.566 6.177 6.177 5.829 5.517 5.235 5.235 4.979 4.746 4.534 4.339 4.160 3.995 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6.233 5.8715.548 5.258 4.997 4.760 4.544 4.347 4.166 4,166 3.999