Amount to be invested Annual net cash flows: Year 1 Year 2 Year 3 Year Maintenance Equipment $872,471 9 10 Required: 373,000 347,000 317,000 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 M 5 0.747 0.621 0.567 6 0.705 0.564 0.507 7 0.665 0.513 0.452 8 0.627 0.467 0.404 0.592 0.424 0.361 0.558 0.386 Present Value of $1 at Compound Interest 6% 10% 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 12% 0.322 Total present value of net cash flow Less amount to be invested Net present value Ramp Facilities $578,619 272,000 245,000 218,000 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 Network $283,284 168,000 116,000 84,000 1. Assuming that the desired rate of return is 10%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar. Maintenance Equipment Ramp Facilities Computer Network 2=C
Amount to be invested Annual net cash flows: Year 1 Year 2 Year 3 Year Maintenance Equipment $872,471 9 10 Required: 373,000 347,000 317,000 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 M 5 0.747 0.621 0.567 6 0.705 0.564 0.507 7 0.665 0.513 0.452 8 0.627 0.467 0.404 0.592 0.424 0.361 0.558 0.386 Present Value of $1 at Compound Interest 6% 10% 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 12% 0.322 Total present value of net cash flow Less amount to be invested Net present value Ramp Facilities $578,619 272,000 245,000 218,000 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 Network $283,284 168,000 116,000 84,000 1. Assuming that the desired rate of return is 10%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar. Maintenance Equipment Ramp Facilities Computer Network 2=C
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
am.101.
Transcribed Image Text:Amount to be invested
Annual net cash flows:
Year 1
Year 2
Year 3
Year
1
2
3
4
5
6
7
8
9
10
0.705
0.665
0.627
0.592
0.558
Maintenance
Equipment
$872,471
0.424
0.386
Present Value of $1 at Compound Interest
6%
10%
0.943
0.909
0.890
0.826
0.840
0.751
0.792
0.683
0.747
0.621
0.564
0.513
0.467
373,000
347,000
317,000
12%
0.893
0.797
0.712
0.636
0.567
0.507
0.452
0.404
0.361
Total present value of net cash flow
Less amount to be invested
Net present value
0.322
Ramp
Facilities
$578,619
272,000
245,000
218,000
15%
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
$
20%
0.833
0.694
0.579
0.482
0.402
0.335
0.279
0.233
0.194
0.162
Computer
Network
$283,284
Required:
1. Assuming that the desired rate of return is 10%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative
net present value. If required, round to the nearest dollar.
Maintenance Equipment Ramp Facilities Computer Network
168,000
116,000
84,000
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