The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $72,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 Cash Flow $29,000 33,000 35,000 21,000 18,000 3 4 5 a. If the cost of capital is 12 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal rate of return % Appendix B Present value of $1, PVF 1 PV = FV (1 + i)" Percent Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 1 0.990 0.980 0.935 0.971 0.943 0.962 0.925 0.943 0.890 0.926 0.857 0.909 0.826 0.901 0.812 2 0.980 0.961 0.873 3 0.971 0.840 0.751 0.942 0.924 0.906 4 0.915 0.888 0.863 0.837 0.813 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.889 0.855 0.822 0.790 0.760 5 0.961 0.951 0.942 0.933 0.923 0.914 0.893 0.797 0.712 0.636 0.567 0.816 0.763 0.713 0.666 0.623 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.794 0.735 0.681 0.630 0.583 0.792 0.747 0.705 0.665 0.683 0.621 0.731 0.659 0.593 0.535 0.482 6 0.564 0.888 0.871 0.507 0.452 7 8 0.853 0.731 0.627 0.582 0.540 0.502 0.513 0.467 0.424 0.789 0.766 0.404 9 0.837 0.703 0.645 0.592 0.544 0.500 0.460 0.434 0.391 0.352 0.361 10 0.820 0.744 0.676 0.558 0.508 0.463 0.422 0.386 0.905 0.896 0.614 0.585 0.322 0.287 11 0.804 0.650 0.475 0.429 0.317 0.722 0.701 0.527 0.497 0.350 0.319 12 0.887 0.788 0.625 0.557 0.444 0.397 0.286 0.257 13 0.879 0.773 0.601 0.415 0.368 0.290 14 0.340 0.681 0.661 0.642 0.623 0.870 0.861 0.853 0.844 0.836 0.758 0.743 0.728 15 0.577 0.555 0.534 0.530 0.505 0.481 0.458 0.436 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.388 0.362 0.339 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.315 0.292 16 0.229 0.205 0.183 0.163 0.263 0.239 0.218 0.198 0.180 0.258 0.232 0.209 0.188 0.170 0.153 0.138 17 0.714 0.605 0.513 18 0.146 0.130 0.700 0.494 0.587 0.570 0.317 0.296 0.277 0.416 0.396 0.270 0.250 0.232 19 0.828 0.686 0.475 0.164 0.116 20 0.820 0.456 0.377 0.312 0.258 0.178 0.149 0.104 0.673 0.610 0.554 0.478 0.215 0.146 0.124 0.074 25 0.780 0.375 0.233 0.184 0.116 0.092 0.059 0.295 0.231 30 0.742 0.552 0.412 0.308 0.174 0.099 0.075 0.057 0.044 0.033 0.131 0.067 40 0.672 0.307 0.142 0.046 0.032 0.022 0.015 0.011 0.453 0.372 0.208 0.141 0.097 0.054 50 0.608 0.228 0.087 0.034 0.021 0.013 0.009 0.005 0.003 Appendix B (concluded) Present value of $1 Percent Period 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 1 0.855 0.833 0.769 0.885 0.783 0.877 0.769 0.870 0.756 0.862 0.743 0.847 0.718 0.840 0.706 0.800 0.640 0.741 0.549 0.714 0.510 0.667 0.444 2 0.731 0.694 0.592 3 0.693 0.641 0.624 0.609 0.593 0.455 0.406 0.364 0.296 0.675 0.592 0.579 0.482 0.512 0.410 4 0.613 0.552 0.534 0.515 0.499 0.350 0.301 0.260 0.198 5 0.543 0.519 0.476 0.456 0.437 0.419 0.402 0.269 0.223 0.186 0.132 6 0.456 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.390 0.352 0.335 0.207 0.480 0.425 0.165 0.410 0.354 0.370 0.314 0.133 0.095 0.088 0.059 7 0.400 0.333 0.296 0.159 0.122 8 0.376 0.285 0.249 0.305 0.263 0.266 0.225 0.279 0.233 0.194 0.123 0.094 0.091 0.067 0.068 0.048 0.039 0.026 9 0.333 0.243 10 0.295 0.208 0.191 0.162 0.035 0.017 0.073 0.056 0.050 0.037 11 0.261 0.162 0.135 0.025 0.012 0.178 0.152 12 0.231 0.137 0.112 0.027 0.018 0.008 13 14 0.204 0.181 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.093 0.078 0.130 0.111 0.095 0.081 0.209 0.176 0.148 0.124 0.104 0.088 0.074 0.062 0.052 0.044 0.116 0.099 0.084 0.071 0.328 0.262 0.210 0.168 0.134 0.107 0.086 0.069 0.055 0.044 0.035 0.028 0.023 0.018 0.014 0.012 0.004 0.001 0 0.043 0.033 0.025 0.020 0.015 0.020 0.015 0.011 0.008 0.013 0.009 0.006 0.005 0.003 0.002 0.002 15 0.160 0.065 16 0.141 0.005 17 0.012 0.125 0.111 0.098 0.080 0.069 0.069 0.059 0.060 0.051 0.043 0.006 0.005 0.003 0.002 18 0.001 0.001 0.009 0.054 0.045 0.038 0.031 0.026 0.010 19 0.060 0.051 0.037 0.003 0.007 0.005 0.002 0.001 20 0.061 0.051 0.043 0.037 0.031 0.087 0.047 0.002 0.001 25 0.024 0.016 0.013 0.001 0 0.073 0.038 0.020 0.005 0.001 30 0.030 0.015 0.004 0.001 0 0.026 0.008 0.002 0.020 0.009 0.002 o 0.012 0.003 0.001 40 0.007 0.001 o 0.005 0.001 0.004 0.001 0 50 0 0 0 Appendix D Present value of an annuity of $1, PVIFA PVA=A 1- 1 (1 + i)" 2% 3% 8% 11% 12% Period 1 0.901 0.971 1.913 0.926 1.783 0.893 1.690 2 1.713 3 2.829 4% 0.962 1.886 2.775 3.630 4.452 5.242 2.577 2.444 2.402 4 3.717 4.580 3.312 3.993 3.037 3.605 1% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 9% 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5.995 5 6 5% 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 4.623 3.102 3.696 4.231 4.712 5.146 4.111 7 4.564 8 6.002 6.733 7.435 4.968 9 5.537 5.328 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 10 5.206 5.747 6.247 6.710 7.139 7.536 8.111 8.760 6.418 6.805 5.650 5.938 11 Percent 6% 7% 0.943 0.935 1.833 1.808 2.673 2.624 3.465 3.387 4.212 4.100 4.917 4.767 5.582 5.389 6.210 5.971 6.802 6.515 7.360 7.024 7.887 7.499 8.384 7.943 8.853 8.358 9.295 8.745 9.712 9.108 10.106 9.447 10.477 9.763 10.828 10.059 11.158 10.336 11.470 10.594 12.783 11.654 13.765 12.409 15.046 13.332 15.762 13.801 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 12 9.385 5.889 6.207 6.492 6.750 6.982 13 9.986 9.394 7.904 8.244 7.161 7.487 7.786 8.061 14 12.134 13.004 13.865 14.718 10.563 15 11.938 11.118 11.652 9.899 10.380 10.838 11.274 16 8.313 17 12.166 15.562 16.398 17.226 18 7.191 7.379 7.549 7.702 7.839 7.963 12.561 13.166 13.754 14.324 14.877 17.413 19.600 23.115 25.730 8.559 8.851 9.122 9.372 9.604 9.818 10.675 11.258 19 6.814 7.103 7.367 7.606 7.824 8.022 8.201 8.365 8.514 9.077 9.427 9.779 9.915 20 12.659 13.134 13.590 15.622 17.292 19.793 21.482 18.046 22.023 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.843 8.055 8.244 8.304 8.544 8.756 8.950 9.129 9.823 10.274 10.757 11.690 12.085 12.462 14.094 15.372 17.159 18.256 25 8.422 BER 30 25.808 40 32.835 39.196 TERRIER 8.694 8.951 9.042 11.925 12.233 50 10.962 Appendix D (concluded) Present value of an annuity of $1 Percent Period 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 1 0.870 0.847 0.840 0.833 0.769 0.667 0.885 1.668 0.862 1.605 0.855 1.585 0.800 1.440 2 1.626 1.566 1.547 1.528 1.361 0.714 1.224 1.589 1.111 3 0.877 1.647 2.322 2.914 3.433 2.361 2.283 2.246 2.174 2.140 4 2.974 2.855 3.352 0.741 1.289 1.696 1.997 2.220 2.385 2.210 2.743 3.199 2.798 3.274 3.685 2.690 3.127 2.106 2.589 2.991 2.639 3.058 1.952 2.362 2.689 2.951 1.816 2.166 2.436 2.643 1.849 2.035 1.407 1.605 1.737 3.517 5 6 3.998 3.889 3.784 3.589 3.498 3.326 2.168 1.824 3.410 3.706 7 4.160 4.039 3.605 3.161 2.508 4.423 4.799 5.132 3.922 4.207 3.812 4.078 2.802 2.925 8 1.883 1.922 4.487 4.344 3.954 3.837 3.329 2.598 4.288 4.639 4.946 5.216 2.263 2.331 2.379 9 4.772 4.607 4.451 4.303 4.163 4.031 3.463 3.019 2.665 10 5.426 5.019 4.833 4.659 4.494 4.339 4.192 3.571 2.715 2.414 3.092 3.147 1.948 1.965 1.977 11 5.687 5.453 5.234 5.029 4.836 4.656 4.327 3.656 2.752 2.438 12 5.918 5.197 4.988 4.793 3.725 3.190 2.456 1.985 5.660 5.842 4.439 4.533 13 6.122 5.118 4.910 3.780 3.223 2.469 1.990 5.421 5.583 5.724 5.847 14 5.229 3.824 2.478 6.302 6.462 6.604 6.002 6.142 4.486 4.611 4.715 4.802 4.876 4.938 4.988 5.342 5.468 5.575 5.668 5.008 5.092 4.611 4.675 15 5.324 3.859 3.249 3.268 3.283 2.779 2.799 2.814 2.825 2.834 2.840 2.844 2.848 1.993 1.995 1.997 16 6.265 5.954 5.405 5.162 4.730 2.484 2.489 2.492 3.887 3.910 17 6.373 6.047 5.749 5.222 4.775 1.998 6.729 6.840 6.938 18 3.295 3.304 6.467 6.550 6.128 6.198 5.475 5.534 5.584 5.818 5.877 5.273 5.316 4.812 4.843 3.928 3.942 2.494 2.496 1.999 1.999 19 3.311 20 7.025 6.623 6.259 5.929 5.628 5.353 4.870 3.954 3.316 2.850 2.497 1.999 2.000 25 6.464 6.097 5.467 4.948 5.033 5.070 5.101 5.195 5.235 5.258 5.262 6.873 7.003 7.105 3.985 3.995 3.329 3.332 5.766 5.829 5.871 2.856 2.857 30 2.499 2.500 6.566 7.330 7.496 7.634 7.675 6.177 2.000 4.979 4.997 40 5.517 5.548 5.554 6.642 6.661 3.999 6.233 6.246 3.333 3.333 2.857 2.857 2.500 2.500 2.000 2.000 50 7.133 5.880 4.999 4.000