Wing Tai Investment Limited received two projects tender namely "Project Air" and "Project Oil".We can select only one of above project in the coming few years due to limited resources and cashflow restriction. The newly recruited Financial Controller reported his duty last week; he willperform the feasibility study based on capital investment decision method to select the better projectforthe company.
Thecashinflow/(outflow)fortwoprojects ofWingTaiInvestmentLimited isgivenbelow:
Year
Project
Air
$
Project
Oil
$
0 (13,200) (13,200) 1 6,150 10,267 2 4,150 2,933 3 1,570 2,080 4 1,330 253 5 2,495 116
Notethatyear5includes scrapvalueof$114forProjectAir. Thecompanyisestimated thatthescrapvalueoftheProjectOilwillbe$46,tobereceivedattheend of the eighth year. Present Value Table Present value of 1 i.e. (1 + r) Where r = discount rate n = number of periods until payment Discount rate (r) Periods (n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0-980 0.971 0.962 0-952 0-943 0-935 0.926 0.917 0.909 0.980 0.961 0.943 0.925 0-907 0-890 0-873 0-857 0.842 0.826 0-971 0.942 0.915 0.889 0-864 0-840 0.816 0.794 0.772 0.751 0.961 0.924 0.888 0.855 0.823 0-792 0-763 0-735 0.708 0.683 0-951 0.906 0.863 0.822 0-784 0-747 0.713 0.681 0.650 0.621 0-942 0-888 0.837 0.790 0-746 0-705 0.666 0.630 0.596 0.564 0.933 0.871 0.813 0.760 0-711 0-665 0-623 0-583 0-547 0.513 0-923 0.853 0.789 0.731 0-677 0-627 0-582 0.540 0.502 0.467 0.941 0.837 0.766 0-703 0-645 0-592 0-544 0-500 0-460 0.424 10 0-905 0.820 0.744 0.676 0-614 0-558 0.508 0.463 0.422 0.386 10 11 0-896 0.804 0.722 0.650 0.585 0-527 0.475 0.429 0.388 0.305 11 12 0-887 0.788 0.701 0.625 0-557 0-497 0-444 0.397 0.356 0.319 12 13 0.879 0.773 0.681 0.601 0.530 0.469 0-415 0.368 0.326 0.290 13 14 0.870 0.758 0.661 0.577 0-505 0-442 0-388 0.340 0.299 0.263 14 15 0.861 0.743 0.642 0.555 0.481 0-417 0-362 0-315 0.275 0.239 15 (n) 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0-901 0-893 0.885 0.877 0-870 0-862 0-855 0.847 0.840 0.833 0.812 0.797 0.783 0.769 0.756 0-743 0-731 0.718 0.706 0.694 0.731 0.712 0.693 0.675 0-658 0-641 0-624 0.609 0.593 0.579 0.659 0.636 0.613 0.592 0.572 0-552 0-534 0.516 0.499 0.482 0-593 0.567 0.543 0.519 0-497 0-476 0-456 0.437 0.419 0.402 0.535 0.507 0-480 0.456 0-432 0-410 0-390 0.370 0.352 0.335 0.482 0.452 0.425 0.400 0-376 0-354 0-333 0.314 0.296 0.279 0-434 0-404 0.376 0.351 0-327 0-305 0-285 0.266 0.249 0.233 0.391 0.361 0.333 0.308 0-284 0-263 0-243 0.225 0.209 0.194 10 0-352 0-322 0.295 0.270 0-247 0-227 0-208 0.191 0.176 0.162 10 11 0.317 0.287 0.261 0.237 0.215 0.195 0-178 0.162 0.148 0.135 11 12 0.286 0.257 0.231 0-208 0-187 0-168 0-152 0-137 0.124 0.112 12 13 0.258 0.229 0-204 0.182 0.163 0-145 0-130 0.116 0.104 0.093 13 14 0.232 0.205 0-181 0.160 0-141 0-125 0-111 0-099 0.088 0.078 14 15 0-209 0.183 0.160 0.140 0.123 0.108 0-095 0.084 0.074 0.065 15Annuity Table Present value of an annuity of 1 i.e. 1 - (1 + r)- Where r = discount rate n = number of periods Discount rate (r) Period's (n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0-990 0-980 0.971 0.962 0-952 0.943 0.935 0-926 0-917 0.909 1-970 1-942 1.913 1-886 1-859 1.833 1.808 1-783 1.759 1.736 2-941 2-884 2.829 2-775 2-723 2.673 2.624 2-577 2-531 2.487 3-902 3.808 3.717 3.630 3-546 3.465 3.387 3.312 3.240 3.170 4-853 4.713 4.580 4-452 4-329 4.212 4.100 3-993 3-890 3.791 5-795 5-601 5.417 5-242 5-076 4-917 4.767 4-623 4-486 4.355 6-728 6-472 6.230 6-002 5-786 5.582 5.389 5-206 5-033 4.868 7-652 7.325 7.020 6-733 6-463 6.210 5.971 5-747 5.535 5.335 8-566 8-162 7.786 7-435 7.108 6.802 6.515 6-247 5.995 5.759 10 9-471 8.983 8.530 8-111 7-722 7.360 7.024 6-710 6.418 6.145 10 11 10-37 9.787 9.253 8-760 8.306 7.887 7.499 7-139 6.805 6.495 11 12 11-26 10.58 9-954 9-385 8.863 8.384 7.943 7-536 7.161 6.814 12 13 12.13 11.35 10.63 9-986 9-394 8.853 8.358 7-904 7.487 7.103 13 14 13-00 12.11 11.30 10-56 9-899 9.295 8.745 8-244 7.786 7.367 14 15 13-87 12.85 11.94 11-12 10-38 9.712 9.108 8-559 8.061 7.606 15 [n) 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0-901 0.893 0-885 0-877 0.870 0.862 0.855 0-847 0.840 0.833 1.713 1.690 1.668 1-647 1.626 1.605 1.585 1.566 1.547 1.528 2-444 2.402 2-361 2-322 2.283 2.246 2.210 2-174 2-140 2.106 UI AWN 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 3.696 3.605 3-517 3-433 3.352 3.274 3-199 3.127 3.058 2.991 4.231 4.111 3-998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 4.712 4.564 4-423 4.288 4.160 4.039 3-922 3.812 3.706 3.605 CO 5.146 4.968 4-799 4.639 4.487 4-344 4-207 4.078 3.954 3-837 9 5.537 5.328 5-132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 10 5.889 5.650 5-426 5.216 5.019 4-833 4-659 4.494 4.339 4-192 10 11 6.207 5.938 5.687 5.453 5:234 5-029 4-836 4.656 4.486 4-327 11 12 6.492 6-194 5-918 5.660 5.421 5-197 4-988 4.793 4-611 4-439 12 13 6.750 6.424 6-122 5.842 5.583 5.342 5-118 4.910 4.715 4-533 13 14 6.982 6-628 6.302 6.002 5-724 5-468 5-229 5.008 4-802 4-611 14 15 7.191 6-811 6.462 6.142 5.847 5-575 5-324 5.092 4.876 4-675 15
