payback and Net Present Value

Appendix B Present value of $1, PV, PV - FV Percent 3% 9% 0.943 08 9. Period 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 10.... 0.905 0.896 O BB7 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.780 0.742 40................... 0.672 50 .......... 0.608 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0728 0.714 0.700 0.686 0.673 0.610 0.552 0.453 0.372 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.478 0.412 0 307 0.228 49 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0513 0.494 0.475 0.456 0.375 0.308 0208 0.141 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 0.436 0416 0.396 0.377 0.295 0.231 0.142 0.087 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.400 0.442 0.417 0304 0.371 0.350 0.331 0.312 0.233 0.174 0.097 0.054 0.935 0.926 0.873 0.857 0.816 0.794 0.763 0.735 0.713 0.681 0.666 0.630 0.623 0.583 0.582 0.540 0.544 0.500 0.5080 .463 0.475 0.429 0.444 0.397 0.415 0.368 0.3.8 0.340 0.362 0.315 0.339 0.292 0.317 0.270 0.296 0.250 0277 0.232 0.258 0.215 0.184 0.146 0.131 0.099 0.067 0.046 0.034 0.021 10% 11% 12% 0.917 0.909 0.901 0.893 0.842 0.826 0.812 0.797 0.772 0.751 0.731 0.712 0.708 0.683 0.659 0.636 0.650 0.621 0.593 0.567 0.596 0.564 0.535 0.507 0.547 0.513 0.482 0.452 0.502 0.467 0.434 0.404 0.460 0.424 0391 0.361 0.4220.386 0.352 0.322 0.388 0.350 0.317 0.287 0.356 0.319 0.296 0.257 0.326 0.290 0.258 0.229 0.299 0.263 0.232 0.205 0.275 0.239 0,209 0183 0.252 0.218 0.188 0.163 0.231 0.198 0.170 0.146 0212 0.180 0.153 0.130 0.194 0.164 11 0.116 0.178 0.149 0.124 0.104 0.116 0.092 0.074 0.059 0.075 0.057 0044 0.033 0.032 0.022 0.015 0.011 0.013 0.009 0.005 0.003 Appendix B (concluded) Period 0.833 0.694 0.579 0.482 0 8888888 Percent 13% 14% 15% 16% 17% 18% 19% 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.693 0.6750.658 0.641 0.624 0.609 0.593 0.613 0.592 0.572 0.552 0.534 0.515 0.499 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.125 0.108 0.093 O ORO 0.069 0.060 0,052 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.008 0 083 007000600051 0.043 0.037 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.047 0.038 0.030 0.024 0.0200.0160.013 0.026 0.020 0,015 0.012 0.009 0.007 0.005 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.002 0.001 0.001 0.001 0 0 0 0.335 0.279 .233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.008 0.031 0.026 0.010 0.004 0.001 0 25% 0.800 0.640 0.512 0.410 0.328 0.262 0.210 0.168 0.134 0.107 0.086 0.069 0.055 0.044 0.035 0.028 0.023 0.018 0.014 0.012 0004 0.001 0 0 30% 35% 40% 50% 0.769 0.741 0.714 0.667 0.5920.549 0.510 0.444 0.455 0.406 0.364 0.296 0.350 0.30 0.250 0.198 0.2690.223 0.186 0.132 0.207 0.165 0.133 0.088 0.159 0.122 0.095 0.059 0.123 0.091 0.068 0.039 0.094 0.067 0.048 0.026 0.073 0.050 0.035 0.017 0.056 0.037 0.025 0.012 0.043 0.027 0.018 0.008 0.033 0.020 0.013 0.005 0.025 0.015 0.009 0.003 0.020 0.011 0.006 0.002 0.015 0.008 0.005 0.002 0.012 0.006 0.003 0.001 0.009 0.005 0.002 0.001 0.007 0.003 0.002 0.005 0.002 0.001 0 0.001 0.001 0 0 0 0 0 0 0 0 0 0 0 0 0 X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: Year 1 Project A $12,000 8.000 6.000 Project B $10,000 6000 16,000 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.) Project A Project B Payback Period year(s) year(s) a-2. Which of the two projects should be chosen based on the payback method? Project A Project B b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 10 percent. (Do not round intermediate cal Net Present Value Project A Project B b-2.Which of the two projects should be chosen based on the net present value method? Project A Project B c. Should a firm normally have more confidence in the payback method or the net present value method? Payback method Net present value method