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TABLE 11.4A Present Value of Annuity of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 0.9709 0.9639 0.9615 0.9592 0.9524 0.9434 0.9346 0.9259 1 0.9804 2 1.9416 1.9135 1.8929 1.8861 1.8794 1.8594 1.8334 1.8080 1.7833 3 2.8839 2.8286 2.7883 4 3.8077 3.6514 3.7171 4.5797 2.7751 2.7620 2.7232 2.6730 2.6243 2.5771 3.6299 3.6086 3.5460 3.4651 3.3872 3.3121 4.4518 4.4207 4.3295 4.2124 4.1002 3.9927 5.2421 5.1997 5.0757 4.9173 4.7665 4.6229 5 4.7135 4.4833 6 5.6014 5.4172 5.2851 7 6.4720 6.2303 6.0579 6.0021 5.9470 5.7864 5.5824 5.3893 5.2064 8 9 10 20 Periods 15% 1 73255 7.0197 6.8028 6.7327 6.6638 6.4632 6.2098 5.9713 5.7466 8.1622 7.7861 75208 7.4353 73513 71078 6.8017 6.5152 6.2469 8.9826 8.5302 8.2128 8.1109 8.0109 77217 73601 70236 6.7101 16.3514 14.8775 13.8962 13.5903 13.2944 12.4622 11.4699 10.5940 9.8181 9% 10% 11% 12% 13% 14% 20% 25% 0.9174 0.9091 0.9009 0.8929 0.8550 0.8772 0.8696 0.8333 0.8000 1.7591 1.7355 1.7125 1.690116681 1.6467 1.6257 15278 1.4400 2.5313 2.4869 2.4437 2.4018 2.3612 2.3216 2.2832 2.1065 1.9520 3.2397 3.1699 3.1024 3.0373 2.9745 2.9137 2.8550 2.5887 2.3616 3.8897 3.7908 3.6959 3.6048 3.5172 3.4331 3.3522 2.9906 2.6893 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.7845 3.3255 2.9514 5.0330 4.8684 47122 4.5638 4.4226 4.2883 4.1604 3.6046 3.1611 2 3 4 5 6 7 8 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.4873 3.8372 3.3289 09 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.7716 4.0310 3.4631 10 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 5.0188 4.1925 3.5705 20 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 6.2593 4.8696 3.9539 TABLE 11.2A Present Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 1 2 3 4 5 6 7 0.9804 0.9709 0.9639 0.9615 0.9592 0.9524 0.9434 0.9346 0.9259 0.9612 0.9426 0.9290 0.9246 0.9201 0.9070 0.8900 0.8734 0.8573 0.9423 0.9151 0.8954 0.8890 0.8826 0.8638 0.8396 0.8163 0.7938 0.9238 0.8885 0.8631 0.8548 0.8466 0.8227 0.7921 0.7629 0.7350 0.9057 0.8626 0.8319 0.8219 0.8121 0.7835 0.7473 0.7130 0.6806 0.8880 0.8375 0.8018 0.7903 0.7790 0.7462 0.7050 0.6663 0.6302 0.8706 0.8131 0.7728 0.7599 0.7473 0.7107 0.6651 0.6227 0.5835 0.8535 0.7894 0.7449 0.7307 0.7168 0.6768 0.6274 0.5820 0.5403 0.8368 0.7664 0.7180 0.7026 0.6876 0.6446 0.5919 0.5439 0.5002 0.8203 0.7441 0.6920 0.6756 0.6595 0.6139 0.5584 0.5083 0.4632 0.6730 0.5537 0.4789 0.4564 0.4350 0.3769 0.3118 0.2584 0.2145 9% 10% 11% 12% 13% 14% 15% 20% 25% 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.8333 0.8000 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.6944 0.6400 00 9 10 20 Periods 1 2 3 3 4 07 6 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575 0.5787 0.5120 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.4823 0.4096 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4019 0.3277 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4323 0.3349 0.2621 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3759 0.2791 0.2097 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3269 0.2326 0.1678 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 0.1938 0.1342 7 8 9 10 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 0.1615 0.1074 20 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.0611 0.0261 0.0115 3% 4.25% 5% 6% 7% 8% TABLE 11.3A Future Value of an Annuity of $1 Periods 2% 3.75% 4% 1 1.0000 10000 1.0000 1.0000 2.0200 2.0300 2.0375 2.0400 3.0604 3.0909 3.1139 3.1216 1.0000 1.0000 1.0000 N 2.0425 2.0500 2.0700 1.0000 2.0800 3.2464 4.5061 3 3.1293 3.1525 3.2149 4 4.1216 4.1836 4.2307 4.2465 4.2623 1.0000 2.0600 3.1836 4.3746 5.6371 6.9753 8.3938 4.3101 4.4399 5 5.2040 5.3091 5.3893 5.4163 5.4434 5.5256 5.7507 5.8666 6 6.3061 6.4684 6.5914 6.6330 6.6748 6.8019 7.1533 7.3359 7 7.4343 7.6625 7.8386 7.8983 7.9585 8.1420 8.6540 8.9228 00 8.5830 8.8923 9.1326 9.2142 9.2967 9.5491 9.8975 10.2598 10.6366 9 10 20 Periods 9.7546 10.1591 10.4750 10.5828 10.6918 11.0266 11.4913 11.9780 12.4876 10.9497 11.4639 11.8678 12.0061 12.1462 12.5779 13.1808 13.8164 14.4866 24.2974 26.8704 29.0174 29.7781 30.5625 33.0660 36.7856 40.9955 45.7620 9% 10% 11% 12% 13% 14% 15% 20% 25% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0900 2.1000 2.1100 2.1200 2.1300 2.1400 2.1500 2.2000 2.2500 1 2 3 3.2781 3.3100 3.3421 3.3744 3.4069 3.4396 3.4725 3.6400 3.8125 4 4.5731 4.6410 4.7097 4.7793 4.8498 4.9211 4.9934 5.3680 5.7656 5 5.9847 6.1051 6.2278 6.3528 6.4803 6.6101 6.7424 7.4416 8.2070 6 7.5233 7.7156 7.9129 7 8 9.2004 9.4872 9.7833 11.0285 11.4359 11.8594 13.0210 13.5975 14.1640 15.1929 15.9374 16.7220 8.1152 8.3227 8.5355 8.7537 9.9299 11.2588 10.0890 10.4047 10.7305 11.0668 12.9159 15.0735 12.2997 12.7573 13.2328 13.7266 16.4991 19.8419 14.7757 15.4157 16.0853 16.7856 20.7989 25.8023 17.5487 18.4197 19.3373 20.3037 25.9587 33.2529 9 10 20 51.1601 572750 64.2028 72.0524 80.9468 91.0249 102.4436 186.6880 342.9447 TABLE 11.1A Future Value of $1 3 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 0 1.0000 10000 10000 10000 10000 10000 10000 10000 10000 1 1.0200 1.0300 1.0375 1.0400 1.0425 1.0500 1.0600 1.0700 1.0800 2 1.0404 1.0609 1.0764 10816 10868 11025 1.1236 1.1449 1.1664 3 1.0612 1.0927 1.1168 11249 1.1330 1.1576 1.1910 1.2250 1.2597 4 1.0824 11255 1.1587 1.1699 1.1811 12155 1.2625 1.3108 1.3605 5 1.1041 1.1593 1.2021 1.2167 1.2313 1.2763 1.3382 1.4026 1.4693 6 1.1262 11941 1.2472 1.2653 1.2837 13401 1.4185 1.5007 1.5869 7 1.1487 1.2299 1.2939 1.3159 1.3382 1.4071 1.5036 1.6058 1.7138 8 1.1717 12668 1.3425 1.3686 1.3951 1.4775 1.5938 17182 1.8509 9 1.1951 1.3048 13928 1.4233 1.4544 1.5513 1.6895 1.8385 1.9990 10 1.2190 13439 1.4450 1.4802 15162 1.6289 17906 1.9672 2.1589 20 1.4859 1.8061 2.0882 2.1911 2.2989 2.6533 3.2071 3.8697 4.6610 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% O 1.0000 10000 10000 10000 10000 10000 10000 1.0000 1.0000 5 6 1 1.0900 1.1000 1.1100 1.1200 1.1300 1.1400 1.1500 1.2000 12500 N 1.1881 3 12950 4 1.4116 LO 1.5386 1.2100 1.2321 1.2544 1.2769 1.2996 1.3225 1.4400 1.5625 1.3310 1.3676 14049 1.4429 14815 1.5209 17280 1.9531 1.4641 1.5181 1.5735 1.6305 1.6890 1.7490 2.0736 2.4414 1.6105 1.6851 17623 1.8424 1.9254 2.0114 2.4883 3.0518 1.7716 1.8704 1.9738 2.0820 2.1950 2.3131 2.9860 3.8147 1.9487 2.0762 2.2107 2.3526 2.5023 2.6600 3.5832 4.7684 2.1436 2.3045 2.4760 2.6584 2.8526 3.0590 4.2998 5.9605 09 1.6771 7 1.8280 1.9926 8 9 10 2.1719 2 3579 2.5580 2.7731 3.0040 3.2519 3.5179 5.1598 7.4506 2.3674 2.5937 2.8394 3.1058 3.3946 3.7072 4.0456 6.1917 9.3132 20 5.6044 6.7275 8.0623 9.6463 11.5231 13.7435 16.3665 38.3376 86.7362 Hearne Company has a number of potential capital Investments. Because these projects vary In nature, Initial Investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. (Future Value of $1. Present Value of $1, Future Value Annuity of S1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Project 1: Retooling Manufacturing Facility This project would require an initial Investment of $4,970,000. It would generate $973,000 In additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,920,000. Project 2: Purchase Patent for New Product The patent would cost $3,820,000, which would be fully amortized over five years. Production of this product would generate $706,700 additional annuat net Income for Hearne. Project 3: Purchase a New Fleet of Delivery Trucks Hearne could purchase 25 new delivery trucks at a cost of $160,500 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,200. Purchasing the feet would allow Hearne to expand its customer territory resulting in $239,000 of additional net Income per year. Required: 1. Determine each project's accounting rate of return. 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project. 4. Determine the profitability Index of each project and prioritize the projects for Hearne. Complete this question by entering your answers in the tabs below. Required Required Required Required 2 3 Determine each project's accounting rate of return. (Round your answers to 2 decimal places.) Accounting Rate of Return % Project 1 Project 2 Project 3 % Set Required 2 > Hearne Company has a number of potential capital Investments. Because these projects vary In nature. Initial Investment and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. Future Value of $1. Present Value of $i, Future Value Annuity of $1, Present Value Annulty or $1.) (Use appropriate factor(s) from the tables provided.) Project 1: Retooling Manufacturing Facility This project would require an initial investment of $4.970,000. It would generate $973.000 in additional net cash flow each year. The new machinery has a useful life of elght years and a salvage value of $1.920,000. Project 2: Purchase Patent for New Product The patent would cost $3,820,000, which would be fully amortized over five years. Production of this product would generate $706.700 addiuional annual net Income for Hearne. Project 3: Purchase a New Fleet of Delivery Trucks Hearne could purchase 25 new delivery trucks at a cost of $160.600 each. The feet would have a useful life of 10 years, and each truck would have a salvage value of $6.200. Purchasing the feet would allow Hearne to expand its customer territory resulting in $239,000 or additional net income per year Required: 1. Determine each project's accounting rate of return, 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project 4. Determine the profitability Index of each project and prioritize the projects for Hearne. Complete this question by entering your answers in the tabs below. Required Required Required Required 1 3 Determine each project's payback period. (Round your answers to 2 decimal places.) Payback Period Project years Project 2 years Project 3 years Hearne Company has a number of potential capital Investments. Because these projects vary in nature. Initial Investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. Future Value of S1, Present Value of Si, Future Value Annuity of S1, Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.) Project 1: Retooling Manufacturing Facility This project would require an initial Investment of $4.970,000. It would generate $973,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1.920,000. Project 2: Purchase Patent for New Product The patent would cost $3,820,000, which would be fully amortized over five years. Production of this product would generate $706,700 additional annual net income for Hearne. Project 3: Purchase a New Fleet of Dellvery Trucks Hearne could purchase 25 new delivery trucks at a cost of $160,600 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of S6,200. Purchasing the feet would allow Hearne to expand its customer territory resulting in $239,000 of additional net income per year. Required: 1. Determine each project's accounting rate of return. 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project. 4. Determine the profitability Index of each project and prioritize the projects for Hearne. Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 3 4 Using a discount rate of So percent, calculate the net present value of each project. (Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.) Not Present Value Project Project 2 Project 3 Hearne Company has a number of potential capital Investments. Because these projects vary in nature. Initial Investment, and time hortzon, management is finding it difficult to compare them. Assume straight line depreciation method is used. (Future Value of S1, Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Project 1: Retooling Manufacturing Facility This project would require an initial Investment of 54,970,000. It would generate $973,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of 51.920,000. Project 2: Purchase Patent for New Product The patent would cost $3,820.000, which would be fully amortized over five years. Production of this product would generate $706.700 additional annual net income for Hearne. Project 3: Purchase a New Fleet of Delivery Trucks Hearne could purchase 25 new delivery trucks at a cost of $160,600 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6.200. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $239,000 of additional net Income per year. Required: 1. Determine each project's accounting rate of return. 2. Determine each project's payback period. 3. Using a discount rate of 10 percent, calculate the net present value of each project. 4. Determine the profitability Index of each project and prioritize the projects for Hearne. Complete this question by entering your answers in the tabs below. Required Required Required Requited 2. 3 Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.) Show less Profitability Index Rank Project 1 Project 2 Project 3

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