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W S F2 X mand Cooper Tire Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years. At the end of 7 years, the machine would have a salvage value of $51,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $72,000. The company requires a minimum pretax return of 18% on all investment projects. (Ignore income taxes.) The present value of the annual cost savings is closest to: Determine the appropriate discount factor(s) using the tables provided. #3 3 EXHIBIT 12B-1 Present Value of $1; 1 (1+r) n 11% 0.901 12% 13% 0.893 0.885 1 2 0.812 3 4 5 6 0.279 Periods 4% 5% 6% 7% 8% 9% 10% 14% 15% 16% 17% 18% 19% 20% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.296 0.333 0.314 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.645 0.703 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.209 0.225 0.194 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.176 0.208 0.191 0.162 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.625 0.397 0.557 0.497 0.444 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.112 0.137 0.124 0.530 0.469 0.601 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.078 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 7 0.233 8 9 10 11 12 13 14 EXHIBIT 12B-2 Present Value of an Annuity of $1 in Arrears; 1/r(1-(1/(1+r)^n)) Periods 1 2 3 4 E D 80 F3 C 4% 5% 6% 7% 8% 0.952 0.943 0.962 0.935 0.926 1.886 1.859 1.833 1.808 2.723 3.546 2.775 3.630 $ 4 4 R Q F4 F 2.673 2.624 2.577 2.531 3.465 3.387 3312 3 240 07 d % 5 V T 16 F5 9% 10% 11% 0.917 0.909 0.901 1.783 1.759 1.736 1.713 2.487 2.444 3.170 3.102 G B F6 Y H & N F7 12 U J 71 67 == NE 12% 13% 14% 15% 16% 0.893 0.885 0.877 0.870 0.862 1.690 1.668 1.647 1.626 1.605 1.585 2.361 2.322 2.283 2.246 2.402 3.037 2.974 2.914 2.855 2.798 --- * 00 8 DII F8 M ENE ( 9 K DD F9 H O O command 7 18% 17% 0.855 0.847 19% 20% 0.840 0.833 1.547 1.566 1.528 2.210 2.174 2.140 2.106 2.743- 2.690 2.639 2.589 F10 P V I & F11 option ON M = {} ? 1 F12 1 delete ret

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