Use the following information to answer questions 24-26 Jefferson County's Board of Representatives is considering the purchase of a site for a new sanitary landfill . The purchase price for the site is $292,000 and preparatory work will cost $56,920. The landfill would be usable for 10 years. The board hired a consultant, who estimated that the new landfill would cost the county $52,000 per year less to operate than the county's current landfill. The current landfill also will last 10 more years. For a landfill project, Jefferson County can borrow money from the federal government at a subsidized rate. The county's hurdle rate is only 4 percent for this project. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-26 Recovery of Investment (Section 1) (LO 16-1, 16-2) Required: Calculate the recovery of Investment and return on Investment for Jefferson County's landfill project. (Round your answers to the nearest dollar amount. Final answer may be slightly off due to rounding error.) Year 1 2 3 5 6 7 8 9 10 348,920 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 Unrecovered investment at beginning of year Cost savings during year Return on unrecovered investment Recovery of investment Unrecovered investment at end of year Future Value and Present Value Tables Table 1 Future Value of $1.00(1 + " 6% 8% 10% 12% 14% 20% Perlod 1 2 3 4% 1.040 1.082 1.125 1.170 1.217 1.060 1.124 1.140 1.300 1.120 1.254 1.405 1.574 1.762 1.191 1.263 1.338 4 1.482 1.689 1.925 5 1.080 1.166 1.260 1.361 1.469 1.587 1.714 1.851 1.999 2.159 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 6 7 8 9 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.359 2.594 2.853 3.139 3.452 3.798 4.177 1.266 1.316 1.369 1.423 1.480 1.540 1.601 1.665 1.732 1.801 1.419 1.504 1.594 1.690 1.791 1.898 2.012 2.133 2.261 2.397 10 1.974 2.211 2.476 2.773 3.106 3.479 3.896 2.195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7.138 11 12 13 14 15 2.332 2.518 2.720 2.937 3.172 4.661 10.063 21.725 4.364 4.887 5.474 7.430 8.916 10.699 12.839 15.407 38.338 237.380 1,469.800 20 30 40 2.191 3.243 4.801 3.207 5.744 10.286 6.728 17.450 45.260 9.646 29.960 93.051 13.743 50.950 188.880 Period 4% 6% 8% 10% 12% 14% 20% Table II Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) (1 + 1"-1 1 1.000 2.040 3.122 4.247 5.416 2 3 4 5 1.000 2.060 3.184 4.375 5.637 1.000 2.080 3.246 4.506 5.867 1.000 2.100 3.310 4.641 6.105 1.000 2.120 3.374 1.000 2.220 3.640 5.368 7.442 r 4.779 6.353 1.000 2.140 3.440 4.921 6.610 8.536 10.730 13.233 16.085 19.337 7.336 8.923 6 7 8 9 10 6.633 7.898 9.214 10.583 12.006 10.637 12.488 14.487 7.716 9.487 11.436 13.580 15.938 8.115 10.089 12.300 14.776 17.549 6.975 8.394 9.898 11.491 13.181 14.972 16.870 18.882 21.015 23.276 9.960 12.916 16.499 20.799 25.959 32.150 39.580 48.497 59.196 72.035 11 12 13 14 15 13.486 15.026 16.627 18.292 20.024 16.646 18.977 21.495 24.215 27.152 18.531 21.385 24.523 27.976 31.773 20.655 24.133 28.029 32.393 37.280 23.045 27.271 32.089 37.581 43.842 57.276 91.025 20 30 40 29.778 56.085 96.026 36.778 79.058 154.762 45.762 113.283 259.057 164.496 442.597 75.052 241.330 767.090 356.790 1,342.000 186.690 1,181.900 7,343.900 Table III Present Value of $1.00 1 (1 + )" Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 1 .833 .893 .797 .926 .857 .794 2 3 .962 .925 .889 .855 .909 .826 .751 .694 .877 .769 .675 .592 .862 .743 .641 .552 .820 .672 .551 ,451 .806 .650 .524 423 .794 .630 .500 .397 .847 .718 .609 .516 437 .370 .314 .781 .610 .477 .373 .579 482 4 5 5 .476 .943 .890 .840 .792 .747 .705 .665 .627 .592 .558 .735 .681 .630 .583 .822 .790 .760 .731 .703 .676 .712 .636 .567 .507 ,452 ,404 .361 .322 .341 .275 .222 6 7 .519 .456 .400 .351 .308 .270 .683 .621 .564 .513 467 424 .386 .350 .319 .290 .263 .239 .402 .335 279 233 .194 .162 .370 303 .249 .204 .167 .137 .315 .250 .198 157 .769 .592 .455 .350 .269 .207 .159 .123 ,094 .073 .758 .574 ,435 .329 .250 .189 .143 .108 ,082 ,062 .291 .227 .178 .139 . 108 .085 410 .354 305 263 .227 8 9 10 .540 .500 .266 .225 .191 .179 .144 .116 .125 .463 .099 11 .650 .527 .429 .237 .135 .112 .094 .079 .066 .047 12 13 14 15 .625 .601 .577 .555 .497 ,469 442 ,417 .397 .368 .340 .315 .287 .257 .229 .205 .183 208 .182 .160 .140 .195 .168 .145 .125 . 108 .051 .162 .137 .116 .099 .084 .037 .007 .001 .112 .093 .078 .066 .026 .092 .075 .062 .051 .076 .061 .049 .040 .062 .050 .039 ,031 .052 .040 .032 .025 ,056 .043 ,033 .025 .020 .036 .027 .021 .016 ,456 215 .073 .019 .010 .007 ,005 .004 20 30 40 .312 174 .097 .149 .067 .014 .002 .104 .033 .011 .003 308 .208 .001 .001 .099 .046 .020 .005 .012 .003 .004 .001 .022 - Table IV Present Value of Series of $1.00 Cash Flows 1 (1 + m) / (i-dl Period 4% 6% 8% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30% 1 0.794 1.424 2 3 4 5 0.962 1.886 2.775 3.630 4.452 0.833 1.528 2.106 2.589 0.862 1.605 2.246 2.798 3.274 10% 12% 0.909 0.896 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.606 4.355 4.111 4.868 4.564 5.335 4.968 5.759 5.328 6.145 5.650 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 0.781 1.392 1.868 2.241 2.532 0.800 1.440 1.952 2.362 2.689 2.951 3.161 3.329 0.769 1.361 1.816 2.166 2.436 2.991 1.923 2.320 2.635 2.885 3.083 3.241 6 7 5.242 6.002 6.733 3.685 4.039 4.344 4.607 3.326 3,605 3.837 0.820 1.492 2.042 2.494 2.864 3.167 3.416 3.619 3.786 3.923 4.035 4.127 4.203 4.265 4.315 8 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 9.818 11.258 11.925 9 2.759 2.937 3.076 3.184 3.269 7.435 8.111 3.463 3.571 0.806 1.457 1.981 2.404 2.745 3.020 3.242 3.421 3.566 3.682 3.776 3.851 3.912 3.962 4.001 4.110 4.160 4.166 4.946 5.216 5.453 5.660 4.833 5.938 10 11 12 13 14 15 3.656 3.725 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 8.760 9.385 9.986 10.563 7.887 8.384 8.853 9.295 4.303 4.494 4.656 4.793 4.910 5.008 5.092 6.496 6.814 7.103 7.367 7.606 8.514 9.427 9.779 3.335 3.387 3.427 6.194 6.424 6.628 6.811 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.870 4.979 4.997 5.029 5.197 5.342 5.468 5.575 5.929 6.177 6.234 3.780 3.824 3.859 3.366 3.465 3.544 3.606 3.656 3.696 3.726 3.808 3.842 3.846 5.842 6.002 6.142 6.623 7.003 7.105 9.712 11.118 13.590 17.292 19.793 20 30 3.316 11.470 13.765 15.046 7.469 8.055 8.244 5.353 5.517 5.548 4.460 4.534 4.544 3.459 3.483 3.546 3.569 3.571 3.964 3.995 3.999 3.332 3.333 40 Use the following information to answer questions 24-26 Jefferson County's Board of Representatives is considering the purchase of a site for a new sanitary landfill . The purchase price for the site is $292,000 and preparatory work will cost $56,920. The landfill would be usable for 10 years. The board hired a consultant, who estimated that the new landfill would cost the county $52,000 per year less to operate than the county's current landfill. The current landfill also will last 10 more years. For a landfill project, Jefferson County can borrow money from the federal government at a subsidized rate. The county's hurdle rate is only 4 percent for this project. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-26 Recovery of Investment (Section 1) (LO 16-1, 16-2) Required: Calculate the recovery of Investment and return on Investment for Jefferson County's landfill project. (Round your answers to the nearest dollar amount. Final answer may be slightly off due to rounding error.) Year 1 2 3 5 6 7 8 9 10 348,920 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 Unrecovered investment at beginning of year Cost savings during year Return on unrecovered investment Recovery of investment Unrecovered investment at end of year Future Value and Present Value Tables Table 1 Future Value of $1.00(1 + " 6% 8% 10% 12% 14% 20% Perlod 1 2 3 4% 1.040 1.082 1.125 1.170 1.217 1.060 1.124 1.140 1.300 1.120 1.254 1.405 1.574 1.762 1.191 1.263 1.338 4 1.482 1.689 1.925 5 1.080 1.166 1.260 1.361 1.469 1.587 1.714 1.851 1.999 2.159 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 6 7 8 9 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.359 2.594 2.853 3.139 3.452 3.798 4.177 1.266 1.316 1.369 1.423 1.480 1.540 1.601 1.665 1.732 1.801 1.419 1.504 1.594 1.690 1.791 1.898 2.012 2.133 2.261 2.397 10 1.974 2.211 2.476 2.773 3.106 3.479 3.896 2.195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7.138 11 12 13 14 15 2.332 2.518 2.720 2.937 3.172 4.661 10.063 21.725 4.364 4.887 5.474 7.430 8.916 10.699 12.839 15.407 38.338 237.380 1,469.800 20 30 40 2.191 3.243 4.801 3.207 5.744 10.286 6.728 17.450 45.260 9.646 29.960 93.051 13.743 50.950 188.880 Period 4% 6% 8% 10% 12% 14% 20% Table II Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) (1 + 1"-1 1 1.000 2.040 3.122 4.247 5.416 2 3 4 5 1.000 2.060 3.184 4.375 5.637 1.000 2.080 3.246 4.506 5.867 1.000 2.100 3.310 4.641 6.105 1.000 2.120 3.374 1.000 2.220 3.640 5.368 7.442 r 4.779 6.353 1.000 2.140 3.440 4.921 6.610 8.536 10.730 13.233 16.085 19.337 7.336 8.923 6 7 8 9 10 6.633 7.898 9.214 10.583 12.006 10.637 12.488 14.487 7.716 9.487 11.436 13.580 15.938 8.115 10.089 12.300 14.776 17.549 6.975 8.394 9.898 11.491 13.181 14.972 16.870 18.882 21.015 23.276 9.960 12.916 16.499 20.799 25.959 32.150 39.580 48.497 59.196 72.035 11 12 13 14 15 13.486 15.026 16.627 18.292 20.024 16.646 18.977 21.495 24.215 27.152 18.531 21.385 24.523 27.976 31.773 20.655 24.133 28.029 32.393 37.280 23.045 27.271 32.089 37.581 43.842 57.276 91.025 20 30 40 29.778 56.085 96.026 36.778 79.058 154.762 45.762 113.283 259.057 164.496 442.597 75.052 241.330 767.090 356.790 1,342.000 186.690 1,181.900 7,343.900 Table III Present Value of $1.00 1 (1 + )" Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 1 .833 .893 .797 .926 .857 .794 2 3 .962 .925 .889 .855 .909 .826 .751 .694 .877 .769 .675 .592 .862 .743 .641 .552 .820 .672 .551 ,451 .806 .650 .524 423 .794 .630 .500 .397 .847 .718 .609 .516 437 .370 .314 .781 .610 .477 .373 .579 482 4 5 5 .476 .943 .890 .840 .792 .747 .705 .665 .627 .592 .558 .735 .681 .630 .583 .822 .790 .760 .731 .703 .676 .712 .636 .567 .507 ,452 ,404 .361 .322 .341 .275 .222 6 7 .519 .456 .400 .351 .308 .270 .683 .621 .564 .513 467 424 .386 .350 .319 .290 .263 .239 .402 .335 279 233 .194 .162 .370 303 .249 .204 .167 .137 .315 .250 .198 157 .769 .592 .455 .350 .269 .207 .159 .123 ,094 .073 .758 .574 ,435 .329 .250 .189 .143 .108 ,082 ,062 .291 .227 .178 .139 . 108 .085 410 .354 305 263 .227 8 9 10 .540 .500 .266 .225 .191 .179 .144 .116 .125 .463 .099 11 .650 .527 .429 .237 .135 .112 .094 .079 .066 .047 12 13 14 15 .625 .601 .577 .555 .497 ,469 442 ,417 .397 .368 .340 .315 .287 .257 .229 .205 .183 208 .182 .160 .140 .195 .168 .145 .125 . 108 .051 .162 .137 .116 .099 .084 .037 .007 .001 .112 .093 .078 .066 .026 .092 .075 .062 .051 .076 .061 .049 .040 .062 .050 .039 ,031 .052 .040 .032 .025 ,056 .043 ,033 .025 .020 .036 .027 .021 .016 ,456 215 .073 .019 .010 .007 ,005 .004 20 30 40 .312 174 .097 .149 .067 .014 .002 .104 .033 .011 .003 308 .208 .001 .001 .099 .046 .020 .005 .012 .003 .004 .001 .022 - Table IV Present Value of Series of $1.00 Cash Flows 1 (1 + m) / (i-dl Period 4% 6% 8% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30% 1 0.794 1.424 2 3 4 5 0.962 1.886 2.775 3.630 4.452 0.833 1.528 2.106 2.589 0.862 1.605 2.246 2.798 3.274 10% 12% 0.909 0.896 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.606 4.355 4.111 4.868 4.564 5.335 4.968 5.759 5.328 6.145 5.650 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 0.781 1.392 1.868 2.241 2.532 0.800 1.440 1.952 2.362 2.689 2.951 3.161 3.329 0.769 1.361 1.816 2.166 2.436 2.991 1.923 2.320 2.635 2.885 3.083 3.241 6 7 5.242 6.002 6.733 3.685 4.039 4.344 4.607 3.326 3,605 3.837 0.820 1.492 2.042 2.494 2.864 3.167 3.416 3.619 3.786 3.923 4.035 4.127 4.203 4.265 4.315 8 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 9.818 11.258 11.925 9 2.759 2.937 3.076 3.184 3.269 7.435 8.111 3.463 3.571 0.806 1.457 1.981 2.404 2.745 3.020 3.242 3.421 3.566 3.682 3.776 3.851 3.912 3.962 4.001 4.110 4.160 4.166 4.946 5.216 5.453 5.660 4.833 5.938 10 11 12 13 14 15 3.656 3.725 2.643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 8.760 9.385 9.986 10.563 7.887 8.384 8.853 9.295 4.303 4.494 4.656 4.793 4.910 5.008 5.092 6.496 6.814 7.103 7.367 7.606 8.514 9.427 9.779 3.335 3.387 3.427 6.194 6.424 6.628 6.811 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.870 4.979 4.997 5.029 5.197 5.342 5.468 5.575 5.929 6.177 6.234 3.780 3.824 3.859 3.366 3.465 3.544 3.606 3.656 3.696 3.726 3.808 3.842 3.846 5.842 6.002 6.142 6.623 7.003 7.105 9.712 11.118 13.590 17.292 19.793 20 30 3.316 11.470 13.765 15.046 7.469 8.055 8.244 5.353 5.517 5.548 4.460 4.534 4.544 3.459 3.483 3.546 3.569 3.571 3.964 3.995 3.999 3.332 3.333 40
