Present Value of $1 8% | 9% | 10% | 12% | 14% | 15% | 16% | 18% | 20% 1 0.990 0.
ID: 2583304 • Letter: P
Question
Present Value of $1 8% | 9% | 10% | 12% | 14% | 15% | 16% | 18% | 20% 1 0.990 0.980 0.91 0.962 0.952 0.93 0.935 0.926 0.917 0.909 0.893 0.8 0.800.86208470.833 2 0.980 0.961 0.943 0.925 0.900.890 0813 857 0.842 0.826 0.79 0.76 0.756 0.7430.718 0.694 3 0.91 0.942 0.915 0.8890.8640.840 0.816 0.794 0.712 0.7510.712 0.675 0.658 06410.609 0.579 40.961 0.924 0.888 0855 0.823 0.792 0.763 0.735 0.708 0683 636 0.5920.5720.5520516 0482 5 | 0.951 | 0.906 | 0.863 | 0.822 | 0.784 | 0.747 | 0.713 | 0.681 | 0.650 | 0.621 | 0.567 | 0.519 | 0,497 | 0,476 | 0,437 | 0.402 6 0.942 0.888 0.83 0.790 0.7460.705 0.666 0.6300.596 0.564 0.50 0.456 0432 0410 0.300.335 70.933 0.811 0.813 0.760 0.7110.665 0.623 0.583 0.547 0.513 0.452 0.400 036 0.354 0314 0279 1 0.327 0.30 0.266 0.233 9 0.914 0.830.766 0.703 0.645 0.592 05440.500 0460 04240.361 0.308.2840.2630.2250.194 10 0.905 0.820 0.7440.67606140.5580.5080463 0422 0.386 0.322 0.2 0.240.2270.1910.162 8 0.923 0.853 0.789 0.731 0670620582 .540 0.502 0.467 0.404 0.35 11 0.896 0.804 0.722 06500.58552 0475 04290.388 0350 0.28 0.23 0.215 0.1950.1620.135 0.397 0.356 0.319 0.2570.208 0.187 0.1680.137 0.112 13 0.89 0.713 0.681 0.601 0.530046904150368 0.326 0.290 0229 0.182 0.1630.145 0.1160.093 60 0.141 0.125 0.099 0.078 15 0.861 0.743 0.642 0.555 0.481 0417 0.3620315 0.215.239 .1830.1400.1230.1080.0840.065 12 088 0.788 0.701 0.6250.557049 0444 3 14 0.870 0.758 0.661 0.577 0.505 0.442 038 0340 0.299 0.263 0.205 0.1 16 0.853 0.728 0.623 0.534 0458.394.339 0292 0.252 | 0.218 0.163 0.123 0.10 0.093 0.011 0.054 17 0.844 0.714 0.605 0513 0.436 03710.31 0270 0231 0.198 0.146 0.108 0.093 0.080 0.060 0.045 18 0.836 0.700 0.581 0494 0416. 0.081 0.069 0.0510.038 19 08280.686 0.570 0415 0.3963310270.232 0194 0.164 0.116 0.083 0.07 0.060 0.043 0.031 20 0.820 0.673 0.554 0.456 0.377 0.3120.258 0.215 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.02 0.350 0.296 0.250 0.212 0.180 0.130 0.09 21 0.811 0.660 0.538 0.4390.359 0.2940242 0.199 0.164 0.135 0.093 0.064 0.053 0.044 0.0310.022 22 0.803 0.64 0.522 0.422 03420.280226 0.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 23 0.795 0.634 0.50 0.406 0.326 0.2620.211 0.170 0.138 0.112 0.014 0.049 0.040 0.033 0.0220.015 24 0.788 0.522 0.492 0.390 0.3100.247.19 0.158 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.013 25 0.780 0.610 0478 03750.295 0233 0.184 0.146 0.116 0.092 0.0590.0380.030 024 0.016 0.010 26 0.772 0.598 04640.361 0.2810.220 0.172 0.135 0.106 0.084 0.053 0.033 0.026 0.0210.0140.009 27 0.764 0.586 0.45340268 0.200.161 0.125 0.098 0.076 0.04 0.029 0.023 0018 0.0110.00 28 0.757 0.54 0.430.333 0.2550.1960.150 0.116 0.090 0.069 0.042 0.026 0.020 0.016 0.010 0.006 29 0.749 0.563 0.424 0.321 0.2430.185.141 0.10 0.082 0.063 0.03 0.022 0.017 0.014 0.008 0.005 30 0.742 0552 0412 0.308 0.2310.174.131 0.099 0.075 0.057 0.033 0.020 0.015 0012 0.000.004 40 0.52 0.453 0.30 0.208 0.142 0.09 0060.0460.032 0.0220.0110.0050.0040.0030.0010.001 50 0.600.32 0.228 0.141 0.08 0.054 0.034 0.0210.013 0.0090.003 0.001 0.001 0.0010.0000.000Explanation / Answer
Req 1
=1800000/460000
= 3.9
= {(460000-57500)/1800000}*100
= 22.4
W.Note: Annual Depreciation =1800000/8 = 57500
NPV
IRR
=Lower rate +((Lower rate NPV/(Lower rate NPV-Higher rate NPV))*Diff of the two rates
= 15% + ((264020/(264020+34980))*5
= 15%+ 4.41
= 19.42
W.Note
=2454100/1800000
= 1.363
Answer to Req 2
The company should invest in the project on the basis of
1) Payback is 3.9 so the investment made would be recocered within the period 2) NPV- As NPV is positive 3) Profitability Index is 1.363 which is greater than 1 4) ARR is 22.4 %
The company should invest in the project on the basis of IRR because at the rate of 19.42% the NPV of the project is coming negative.
Payback Period= Initial Investment/Annual Cash Inflow