Below is a table for the present value of $1 at Compound interest.
Year 6% 10% 12% 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 5 0.747 0.621 0.567
Below is a table for the present value of an annuity of $1 at compound interest.
Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605
Using the tables above, determine the present value of $5,033.00 (rounded to the nearest dollar) to be received at the end of each of the next 3 years, assuming an earnings rate of 10%.
Select the correct answer.
$6,543
$5,033
$12,517
$4,530
Below is a table for the present value of $1 at Compound interest.
Year 6% 10% 12% 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 5 0.747 0.621 0.567
Below is a table for the present value of an annuity of $1 at compound interest.
Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605
Using the tables above, if an investment is made now for $21,672.00 that will generate a cash inflow of $2,600.64 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, (assuming an earnings rate of 12%)?
Select the correct answer.
- $7,898
- $13,774
- $21,672
- $2,601
Below is a table for the present value of $1 at Compound interest.
| Year | 6% | 10% | 12% |
| 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 |
| 5 | 0.747 | 0.621 | 0.567 |
Below is a table for the present value of an annuity of $1 at compound interest.
| Year | 6% | 10% | 12% |
| 1 | 0.943 | 0.909 | 0.893 |
| 2 | 1.833 | 1.736 | 1.690 |
| 3 | 2.673 | 2.487 | 2.402 |
| 4 | 3.465 | 3.170 | 3.037 |
| 5 | 4.212 | 3.791 | 3.605 |
Using the tables above, determine the present value of $5,033.00 (rounded to the nearest dollar) to be received at the end of each of the next 3 years, assuming an earnings rate of 10%.
Select the correct answer.
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Below is a table for the present value of $1 at Compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, if an investment is made now for $21,672.00 that will generate a cash inflow of $2,600.64 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, (assuming an earnings rate of 12%)? Select the correct answer.
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Related questions
The following data are accumulated by Reynolds Company inevaluating the purchase of $132,100 of equipment, having afour-year useful life:
| NetIncome | Net CashFlow | |||
| Year 1 | $34,000 | $57,000 | ||
| Year 2 | 21,000 | 44,000 | ||
| Year 3 | 10,000 | 33,000 | ||
| Year 4 | (1,000) | 22,000 | ||
| Present Valueof $1 at Compound Interest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 0.890 | 0.826 | 0.797 | 0.756 | 0.694 |
| 3 | 0.840 | 0.751 | 0.712 | 0.658 | 0.579 |
| 4 | 0.792 | 0.683 | 0.636 | 0.572 | 0.482 |
| 5 | 0.747 | 0.621 | 0.567 | 0.497 | 0.402 |
| 6 | 0.705 | 0.564 | 0.507 | 0.432 | 0.335 |
| 7 | 0.665 | 0.513 | 0.452 | 0.376 | 0.279 |
| 8 | 0.627 | 0.467 | 0.404 | 0.327 | 0.233 |
| 9 | 0.592 | 0.424 | 0.361 | 0.284 | 0.194 |
| 10 | 0.558 | 0.386 | 0.322 | 0.247 | 0.162 |
a. Assuming that the desired rate of return is12%, determine the net present value for the proposal. Use thetable of the present value of $1 presented above. If required,round to the nearest dollar.
| Present value of net cash flow | $ |
| Less amount to be invested | $ |
| Net present value | $ |
Net Present Value Method
The following data are accumulated by Reynolds Company inevaluating the purchase of $122,600 of equipment, having afour-year useful life:
| Net Income | Net Cash Flow | |||
| Year 1 | $41,000 | $69,000 | ||
| Year 2 | 25,000 | 53,000 | ||
| Year 3 | 12,000 | 40,000 | ||
| Year 4 | (1,000) | 27,000 | ||
| Present Value of $1 at CompoundInterest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 0.890 | 0.826 | 0.797 | 0.756 | 0.694 |
| 3 | 0.840 | 0.751 | 0.712 | 0.658 | 0.579 |
| 4 | 0.792 | 0.683 | 0.636 | 0.572 | 0.482 |
| 5 | 0.747 | 0.621 | 0.567 | 0.497 | 0.402 |
| 6 | 0.705 | 0.564 | 0.507 | 0.432 | 0.335 |
| 7 | 0.665 | 0.513 | 0.452 | 0.376 | 0.279 |
| 8 | 0.627 | 0.467 | 0.404 | 0.327 | 0.233 |
| 9 | 0.592 | 0.424 | 0.361 | 0.284 | 0.194 |
| 10 | 0.558 | 0.386 | 0.322 | 0.247 | 0.162 |
a. Assuming that the desired rate of return is20%, determine the net present value for the proposal. Use thetable of the present value of $1 presented above. If required,round to the nearest dollar.
| Present value of net cash flow | $ |
| Less amount to be invested | $ |
| Net present value | $ |
Home Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows:
| Year | Home & Garden | Music Beat | ||
| 1 | $105,000 | $88,000 | ||
| 2 | 86,000 | 103,000 | ||
| 3 | 74,000 | 71,000 | ||
| 4 | 67,000 | 49,000 | ||
| 5 | 21,000 | 42,000 | ||
| Total | $353,000 | $353,000 | ||
Each product requires an investment of $191,000. A rate of 12% has been selected for the net present value analysis.
| Present Value of $1 at Compound Interest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 0.890 | 0.826 | 0.797 | 0.756 | 0.694 |
| 3 | 0.840 | 0.751 | 0.712 | 0.658 | 0.579 |
| 4 | 0.792 | 0.683 | 0.636 | 0.572 | 0.482 |
| 5 | 0.747 | 0.621 | 0.567 | 0.497 | 0.402 |
| 6 | 0.705 | 0.564 | 0.507 | 0.432 | 0.335 |
| 7 | 0.665 | 0.513 | 0.452 | 0.376 | 0.279 |
| 8 | 0.627 | 0.467 | 0.404 | 0.327 | 0.233 |
| 9 | 0.592 | 0.424 | 0.361 | 0.284 | 0.194 |
| 10 | 0.558 | 0.386 | 0.322 | 0.247 | 0.162 |
Required:
1a. Compute the cash payback period for each product.
| Cash Payback Period | |
| Home & Garden | 1 year |
| Music Beat |
1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar.
| Home & Garden | Music Beat | |
| Present value of net cash flow total | $ | $ |
| Less amount to be invested | $ | $ |
| Net present value | $ | $ |
