Question
Waste Industries is evaluating a $53,900 project with the following cash flows. Years Cash Flows 1 $9,180 2 16,200 3 21,800 4 17,400 5 30,600
Waste Industries is evaluating a $53,900 project with the following cash flows.
Years Cash Flows
1 $9,180
2 16,200
3 21,800
4 17,400
5 30,600
The coefficient of variation for the project is 0.205.
Coefficient of Variation Discount Rate
00.25 5%
0.260.50 10%
0.510.75 12%
0.761.00 19%
1.011.25 20%
UseAppendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.
a.Select the appropriate discount rate.
- 20%
- 10%
- 12%
- 5%
- 19%
b.Compute the net present value.(Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
Net present value _______________
c.Based on the net present value should the project be undertaken?
No
Yes
Appendix B Present value of $1, PVIF PV = FV [ 1 ]
Percent
Period
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
1 ......................
0.990
0.980
0.971
0.962
0.952
0.943
0.935
0.926
0.917
0.909
0.901
0.893
2 ......................
0.980
0.961
0.943
0.925
0.907
0.890
0.873
0.857
0.842
0.826
0.812
0.797
3 ......................
0.971
0.942
0.915
0.889
0.864
0.840
0.816
0.794
0.772
0.751
0.731
0.712
4 ......................
0.961
0.924
0.888
0.855
0.823
0.792
0.763
0.735
0.708
0.683
0.659
0.636
5 ......................
0.951
0.906
0.863
0.822
0.784
0.747
0.713
0.681
0.650
0.621
0.593
0.567
6 ......................
0.942
0.888
0.837
0.790
0.746
0.705
0.666
0.630
0.596
0.564
0.535
0.507
7 ......................
0.933
0.871
0.813
0.760
0.711
0.665
0.623
0.583
0.547
0.513
0.482
0.452
8 ......................
0.923
0.853
0.789
0.731
0.677
0.627
0.582
0.540
0.502
0.467
0.434
0.404
9 ......................
0.914
0.837
0.766
0.703
0.645
0.592
0.544
0.500
0.460
0.424
0.391
0.361
10 .....................
0.905
0.820
0.744
0.676
0.614
0.558
0.508
0.463
0.422
0.386
0.352
0.322
11 .....................
0.896
0.804
0.722
0.650
0.585
0.527
0.475
0.429
0.388
0.350
0.317
0.287
12 .....................
0.887
0.788
0.701
0.625
0.557
0.497
0.444
0.397
0.356
0.319
0.286
0.257
13 .....................
0.879
0.773
0.681
0.601
0.530
0.469
0.415
0.368
0.326
0.290
0.258
0.229
14 .....................
0.870
0.758
0.661
0.577
0.505
0.442
0.388
0.340
0.299
0.263
0.232
0.205
15 .....................
0.861
0.743
0.642
0.555
0.481
0.417
0.362
0.315
0.275
0.239
0.209
0.183
16 .....................
0.853
0.728
0.623
0.534
0.458
0.394
0.339
0.292
0.252
0.218
0.188
0.163
17 .....................
0.844
0.714
0.605
0.513
0.436
0.371
0.317
0.270
0.231
0.198
0.170
0.146
18 .....................
0.836
0.700
0.587
0.494
0.416
0.350
0.296
0.250
0.212
0.180
0.153
0.130
19 .....................
0.828
0.686
0.570
0.475
0.396
0.331
0.277
0.232
0.194
0.164
0.138
0.116
20 .....................
0.820
0.673
0.554
0.456
0.377
0.312
0.258
0.215
0.178
0.149
0.124
0.104
25 .....................
0.780
0.610
0.478
0.375
0.295
0.233
0.184
0.146
0.116
0.092
0.074
0.059
30 .....................
0.742
0.552
0.412
0.308
0.231
0.174
0.131
0.099
0.075
0.057
0.044
0.033
40 .....................
0.672
0.453
0.307
0.208
0.142
0.097
0.067
0.046
0.032
0.022
0.015
0.011
50 .....................
0.608
0.372
0.228
0.141
0.087
0.054
0.034
0.021
0.013
0.009
0.005
0.003
Appendix B (conclud
ed) Pr
esent value
of $1
Percent
Period
13%
14%
15%
16%
17%
18%
19%
20%
25%
30%
35%
40%
50%
1 ......................
0.885
0.877
0.870
0.862
0.855
0.847
0.840
0.833
0.800
0.769
0.741
0.714
0.667
2 ......................
0.783
0.769
0.756
0.743
0.731
0.718
0.706
0.694
0.640
0.592
0.549
0.510
0.444
3 ......................
0.693
0.675
0.658
0.641
0.624
0.609
0.593
0.579
0.512
0.455
0.406
0.364
0.296
4 ......................
0.613
0.592
0.572
0.552
0.534
0.515
0.499
0.482
0.410
0.350
0.301
0.260
0.198
5 ......................
0.543
0.519
0.497
0.476
0.456
0.437
0.419
0.402
0.328
0.269
0.223
0.186
0.132
6 ......................
0.480
0.456
0.432
0.410
0.390
0.370
0.352
0.335
0.262
0.207
0.165
0.133
0.088
7 ......................
0.425
0.400
0.376
0.354
0.333
0.314
0.296
0.279
0.210
0.159
0.122
0.095
0.059
8 ......................
0.376
0.351
0.327
0.305
0.285
0.266
0.249
0.233
0.168
0.123
0.091
0.068
0.039
9 ......................
0.333
0.308
0.284
0.263
0.243
0.225
0.209
0.194
0.134
0.094
0.067
0.048
0.026
10 .....................
0.295
0.270
0.247
0.227
0.208
0.191
0.176
0.162
0.107
0.073
0.050
0.035
0.017
11 .....................
0.261
0.237
0.215
0.195
0.178
0.162
0.148
0.135
0.086
0.056
0.037
0.025
0.012
12 .....................
0.231
0.208
0.187
0.168
0.152
0.137
0.124
0.112
0.069
0.043
0.027
0.018
0.008
13 .....................
0.204
0.182
0.163
0.145
0.130
0.116
0.104
0.093
0.055
0.033
0.020
0.013
0.005
14 .....................
0.181
0.160
0.141
0.125
0.111
0.099
0.088
0.078
0.044
0.025
0.015
0.009
0.003
15 .....................
0.160
0.140
0.123
0.108
0.095
0.084
0.074
0.065
0.035
0.020
0.011
0.006
0.002
16 .....................
0.141
0.123
0.107
0.093
0.081
0.071
0.062
0.054
0.028
0.015
0.008
0.005
0.002
17 .....................
0.125
0.108
0.093
0.080
0.069
0.060
0.052
0.045
0.023
0.012
0.006
0.003
0.001
18 .....................
0.111
0.095
0.081
0.069
0.059
0.051
0.044
0.038
0.018
0.009
0.005
0.002
0.001
19 .....................
0.098
0.083
0.070
0.060
0.051
0.043
0.037
0.031
0.014
0.007
0.003
0.002
0
20 .....................
0.087
0.073
0.061
0.051
0.043
0.037
0.031
0.026
0.012
0.005
0.002
0.001
0
25 .....................
0.047
0.038
0.030
0.024
0.020
0.016
0.013
0.010
0.004
0.001
0.001
0
0
30 .....................
0.026
0.020
0.015
0.012
0.009
0.007
0.005
0.004
0.001
0
0
0
0
40 .....................
0.008
0.005
0.004
0.003
0.002
0.001
0.001
0.001
0
0
0
0
0
50 .....................
0.002
0.001
0.001
0.001
0
0
0
0
0
0
0
0
0
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Law, Business And Society
Authors: Tony McAdams, Kiren Dosanjh Zucker, Kristofer Neslund, Kari Smoker
12th Edition
1259721884, 978-1259721885
