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eBook Calculator Net Present Value Use Exhibit 128.1 and Exhibit 120.2 to locate the present value of an annuity of $1, which is the amount to be multiplied times the future annual cash flow amount. Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs sering the pure $2,150,000 and will last 10 years. ..... b. Evee Cardenas is interested in investing in a women's specialty shop. The cost of the investment is $280,000. She estimates that the return from owning her own shop will be $35,000 per year. She estimates that the shop will have a useful life of 6 years. c. Barker Company calculated the NPV of a project and found it to be $63,900. The project's life was estimated to be 8 years. The required rate of return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. 562,000 x Should the company buy the new welding system? Yes 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas investment. Round to the nearest dollar. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. -118,195 x Should she invest? No What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' Investment. Would this affect the decision? What does this tell you about your analysis? Round to the nearest dollar. Previous Next Check My Work eBook Calculator return used for the NPV calculation was 10%. The project was expected to produce annual after-tax cash flows of $135,000. Required: 1. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. $ 562,000 X Should the company buy the new welding system? Yes 2. Conceptual Connection: Assuming a required rate of return of 8%, calculate the NPV for Evee Cardenas' investment. Round to the nearest dollar. If required, round all present value calculations to the nearest dollar. Use the minus sign to indicate a negative NPV. $ -118,195 X Should she invest? No What if the estimated return was $135,000 per year? Calculate the new NPV for Evee Cardenas' investment. Would this affect the decision? What does this tell you about your analysis? Round to the nearest dollari $ 344,105 X The shop should now be purchased. This reveals that the decision to accept or reject in this case is affected by differences in estimated cash flow 3. What was the required investment for Barker Company's project? Round to the nearest dollar. If required, round all present value calculations to the nearest dollar. 656,325 x Feedback Check My Work Previous Next Exhibit 128.1 Present Value of a Single Amount 9% 10% 12% 14% 16% 18% 20% 25% 30% 1 0.99010 0.98039 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.89286 0.87719 0.86207 0.84746 0.83333 0.80000 0.76923 2 0.98030 0.96117 0.94260 0.92456 0.90703 0.89000 0.87344 0,85734 0.84168 0.82645 0.79719 0.76947 0.74316 0.71818 0.69444 0.64000 0.59172 3 0.97059 0.94232 0.91514 0.88900 0.16384 0.83962 0.81630 0.79383 0.77218 075131 0.71178 0.67497 0.64066 0.60863 0.57870 0.51200 0.45517 4 0.96098 0.92385 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.63552 0.59208 0.55229 0.51579 0.48225 0.40960 0.35013 5 0.95147 0.90573 0.86261 0.82193 0.78353 0.74726 071299 0.68058 0.64993 0.62092 0.56743 0.51937 0.47611 0.43711 0.40188 0.32768 0.26933 6 0.04205 0.88797 0.83748 0.79031 0.74622 070496 0.66634 0.63017 0.59627 0.56447 0.50663 0.45559 0.41044 0.37043 0.33490 0.26214 0.20718 7 0,93272 0.87056 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54293 0.51316 045235 0.39964 0.35383 0.31393 0.27908 0.20972 0.15917 8 0.92348 0.85349 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.40388 0.35056 0.30503 0.26604 0.23257 0.16777 0.12259 90.91434 0.83676 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 042410 0.16061 0.30751 0.26295 0.22546 0.19381 0.13422 0.00430 10 0.90529 0.82035 0.74409 0.67556 0.61391 0.55819 0.50835 0.46319 042241 0.38554 0.32197 0.26974 0.22668 0.19106 0.16151 0.10737 0.07254 11 0.89632 0.80426 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.28748 0.23662 0.19542 0.16192 0.13459 0,08590 0.05580 12 0.88745 0.78849 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35553 0.31863 0.25668 0.20756 0.16846 0.13722 0.11216 0.06872 0.04292 13 0.87866 0.77303 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.22917 0.18207 0.14523 0.11629 0.09346 0.05498 0.03302 14 0.86996 0.75788 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.20462 0.15971 0.12520 0.09855 0.07789 0.04398 0.02540 15 0.86135 0.74301 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.18270 0.14010 0.10793 0.08352 0.06491 0.03518 0.01954 16 0.85282 0.72845 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 021763 0.16312 0.12289 0.09304 0.07078 0.05409 0.02815 0.01503 17 0.84438 0.71416 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19784 0.14564 0.10780 0.08021 0.05998 0.04507 0.02252 0.01156 18 0.83602 0.70016 0.58739 0.49363 041552 0.35034 0.29586 0.25025 0.21199 0.17986 0.13004 0.09456 0.06914 0.05083 0.03756 0.01801 0.00889 19 0.82774 0.68643 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.11611 0.08295 0.05139 0.04308 0.03130 0.01441 0.00684 20 0.81954 0.67297 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.10367 0.07276 0.05139 0.03651 0.02608 0.01153 0.00526 21 0.81143 0.65978 0.53755 0.43883 0.35894 0.29416 0.24151 0.19866 0.16370 0.13513 0.09256 0.06383 0.04430 0.03094 0.02174 0.00922 0.00105 22 0.80340 0.64684 0.52189 042196 0.34185 0.27751 0.22571 0.18394 0.15018 0.12285 0,08264 0.05599 0.03819 0.02622 0.01811 0.00738 0.00311 23 0.79544 0.63416 0.50669 0.40523 0.32557 0.26180 0.21095 0.17032 0.13778 0.11168 0.07379 0.04911 0.03292 0.02222 0.01509 0.00590 0.00239 24 0.78757 0.62172 0.49193 0.19012 0.31007 0.24698 0.19715 0.15770 0.12640 0.10153 0.06588 0.04308 0.02838 0.01883 0.01258 0.00472 0.00184 25 0.77977 0.60953 0.47761 0.37512 0.29530 0.23300 0.18425 0.14602 0.11597 0.09230 0.05882 0.03779 0.02447 0.01596 0.01048 0.00378 0.00142 26 0.77205 0.59758 0.46369 0.36060 0 28124 0.21981 0.17220 0.13520 0.10639 0,08391 0.05252 0.03315 0.02109 0.01352 0.00874 0.00302 0.00109 27 0.76440 0.58586 0.45019 0.34682 026785 0.2071 0.1600) 0.12519 0.09761 0.07628 0.04689 0.02903 0.01818 0.01146 0.00728 0.00242 0.00054 28 0.75684 0.57417 0.4703 03118 025509 0.19561 0.15040 0.11591 0.08955 0.06914 0.04187 0.02551 0.01567 0.00971 0.00607 0.00193 0.00065 29 0.74934 0.56311 042415 0.12065 024295 0.18456 0.14056 0.10733 0.08215 0.06304 0.01738 0.02237 0.01151 0.00028 0.00506 0.00155 0.00050 30 0.74192 0.55207 0.41199 030832 0.23138 0.17411 0.11 0.09938 0.07537 0.05731 003338 0.01963 0.01165 0.00097 0.00421 0.00124 0.00038 " PACI Exhibit 128.2 Present Value of an Annuity 4% 5% 6% 9% 10% 12% 14% 16% 18% 20% 25% 30% 1 0.99010 0.98039 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.917430.90909 0.89286 0.87719 0.86207 0.84746 0.83333 0.80000 0.76923 2 1.97040 1.94156 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.69005 1.64666 1.60523 1.56564 1.52778 1.44000 1.36095 3 2.94099 288388 2.82861 2.77509 2.72325 2.67301 2.62432 2.57710 2.53129 2.48685 2.40183 2.32163 2.24589 2.17427 2.10648 1.95200 1.81611 4 3.90197 3.80773 3.71710 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16987 3.03735 2.91371 2.79818 2.69006 2.58873 2.36160 2.16624 5 4.85343 4.71346 4.57971 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.60478 3.43308 3.27429 3.12717 2.99061 2.68928 2.43557 6 5.79548 5.60143 5.41719 5.24214 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.11141 3.88867 3.68474 3.49760 3.32551 2.95142 2.64275 7 6.72819 6.47199 6.23028 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.56376 4.28830 403857 3.81153 3.60459 3.16114 2.80211 8 7.65168 7.32548 7.01969 6.73274 6.46321 6.20979 5.97130 574664 5.53482 5.33493 4.96764 4.63886 4.34359 4.07757 3.83716 3.32891 2.92470 9 8.56602 8.16224 778611 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.32825 4.94637 4.60654 4.30302 4.03097 3.46313 3.01900 109.47130 8.98259 8.53020 8.11090 7.72173 7.36009 7.02358 6.71008 6.417666.14457 5.65022 5.21612 4.83323 4.49409 4.19247 3.57050 3.09154 11 10.36763 9.78685 925262 8.76048 8.30641 7.88687 7.49867 7.13896 6.805196.49506 5.93770 5.45273 5.02864 4.65601 4.32706 3.65640 3.14734 12 11.25508 10.57534 9.95400 9.38507 8.86325 8.38384 7.94269 7.53608 7.160736.81369 6.19437 5.66029 5.19711 4.79322 4.43922 3.72512 3.19026 13 12.13374 11.34837 10.63496 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.42355 5.84236 5.34233 4.90951 4.53268 3.78010 3.22328 14 13.00370 12.10625 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.62817 6.00207 5.46753 5.008064.61057 3.82408 3.24867 15 13.86505 12.84926 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 6.81086 6.14217 5.57546 5.09158 4.67547 3.85926 3.26821 16 14.71787 13.57771 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 6.97399 6.26506 5.66850 5.16235 4.729563.88741 3.28324 17 15.56225 14.29187 13.16612 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.11963 6.37286 5.74870 5.22233 4.77463 3.90993 3.29480 18 16.39827 14.99203 13.75351 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8 20141 7.24967 6.46742 5.81785 5.27316 4.81219 3.92794 3.30369 19 17.22601 15.67846 14.32380 13.13394 12.08532 11.15812 10.33560 9.60360 8.950118.36492 7.36578 6.55037 5.87746 5.31624 4.84350 3.94235 3.31053 2018.04555 16.35143 14.87747 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.46944 6.62313 5.92884 5.35275 4.86958 3.95388 3.31579 21 18.85.698 17.0112115.41502 14.029161282115 11.76408 10.83553 10.01680 929224 8.64860 7.56200 6.68696 5.97314 5.38368 4.89132 3.96311 3.31984 22 19.66038 17.65805 15.93692 14A5112 13.16300 12.04158 11.06124 10.20074 9.442438.77154 7.64465 6.74294 6.01133 5.40990 4.90943 3.97049 3.32296 23 20.45582 18.29220 16.44361 14.85684 13.48857 12.30338 11.27219 10.37106 9.58021 8.88322 7.71843 6.79206 6,04425 5.43212 4.92453 3.97639 3.32535 24 21.24330 18.91393 1693554 15.24696 13.79864 12.55036 11.46013 10.52876 9.70661 8.98474 2.78432 6.83514 6.07263 5.45095 4.93710 3.98111 3.32719 25 22.0231619.52346 17 41315 15.62208 14.09394 12.78336 11.65358 10.67478 9.82258 9.07704 7.84314 6.87293 6.09709 5.46691 4.94759 3.98489 3.32861 26 2279520 20.12104 17.8768415.98277 14.37519 13.00317 11.82575 10.80998 9.92897 9.16095 7.89566 6.90608 6.11818 5.48043 495632 3.98791 3.32970 27 23.55961 20.70690 18.32703 16. 12050 14 64303 13.21053 11.98671 10.93516 10.02658 9.23722 7.94255 693515 6.13636 5.49189 4.96360 3.99033 3.33054 28 24 3164421.28127 18.76411 16.66106 14.89813 13.40616 12.1171111.05108 10.11613 9.10657 7.98442 6.960666.15204 5.50160 4.96967 3.99226 3.33118 29 25.06579 21.84438 19.188451698171 15.14107 13.5907212.2776711.15841 10.19828 9.36961 802181 6.98304 6.16555 5.50983 4.97472 3.99181 3.33168 30 25.80771 22.39646 19.6004417.29201 1517245 13.76483 12 40904 11 25778 10.27365 9.42601 8.05518 7.00266 6.17720 5.51681 4.97894 3.99505 3.33206 10.1111
