Question
In: Accounting
Present value of an Annuity of $1 in Arrears ? Periods 4% 6% 8% 10% 12%...
Present value of an Annuity of $1 in Arrears
?
|
Periods |
4% |
6% |
8% |
10% |
12% |
14% |
|
1 |
0.962 |
0.943 |
0.926 |
0.909 |
0.893 |
0.877 |
|
2 |
1.886 |
1.833 |
1.783 |
1.736 |
1.690 |
1.647 |
|
3 |
2.775 |
2.673 |
2.577 |
2.487 |
2.402 |
2.322 |
|
4 |
3.630 |
3.465 |
3.312 |
3.170 |
3.037 |
2.914 |
|
5 |
4.452 |
4.212 |
3.993 |
3.791 |
3.605 |
4.433 |
|
6 |
5.242 |
4.917 |
4.623 |
4.355 |
4.111 |
3.889 |
|
7 |
6.002 |
5.582 |
5.206 |
4.868 |
4.564 |
4.288 |
|
8 |
6.733 |
6.210 |
5.747 |
5.335 |
4.968 |
4.639 |
|
9 |
7.435 |
6.802 |
6.247 |
5.759 |
5.328 |
4.946 |
|
10 |
8.111 |
7.360 |
6.710 |
6.145 |
5.650 |
5.216 |
?
Cleves Company is considering two projects.
|
? |
Project X |
Project Y |
|
Initial investment |
$500,000 |
$100,000 |
|
Annual cash flows |
$88,500 |
$34,320 |
|
Life of the project |
10 years |
4 years |
|
Depreciation per year |
$50,000 |
$25,000 |
Cleves requires a minimum rate of return of 8%.
| A. | What is the accounting rate of return for each project? |
| B. | What is the net present value for each project? |
| C. | What is the internal rate of return for each project? |
| D. | Given that only one project can be selected, which project should be chosen? Explain your reasoning. |
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Figure 14-11. Present value of an Annuity of $1 in Arrears Periods 4% 6% 8% 10%...
Figure 14-11.
Present value of an Annuity of $1 in
Arrears
Periods
4%
6%
8%
10%
12%
14%
1
0.962
0.943
0.926
0.909
0.893
0.877
2
1.886
1.833
1.783
1.736
1.690
1.647
3
2.775
2.673
2.577
2.487
2.402
2.322
4
3.630
3.465
3.312
3.170
3.037
2.914
5
4.452
4.212
3.993
3.791
3.605
4.433
6
5.242
4.917
4.623
4.355
4.111
3.889
7
6.002
5.582
5.206
4.868
4.564
4.288
8
6.733
6.210
5.747
5.335
4.968
4.639
9
7.435
6.802
6.247
5.759
5.328...
Figure 14-10. Present value of $1 Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943...
Figure 14-10.
Present value of $1
Periods
4%
6%
8%
10%
12%
14%
1
0.962
0.943
0.926
0.909
0.893
0.877
2
0.925
0.890
0.857
0.826
0.797
0.769
3
0.889
0.840
0.794
0.751
0.712
0.675
4
0.855
0.792
0.735
0.683
0.636
0.592
5
0.822
0.747
0.681
0.621
0.567
0.519
6
0.790
0.705
0.630
0.564
0.507
0.456
7
0.760
0.665
0.583
0.513
0.452
0.400
8
0.731
0.627
0.540
0.467
0.404
0.351
9
0.703
0.592
0.500
0.424
0.361
0.308
10
0.676
0.558
0.463...
Present value of $1 Periods 4% 6% 8% 10% 12% 14% 1 0.96154 0.94340 0.92593 0.90909...
Present value of $1
Periods
4%
6%
8%
10%
12%
14%
1
0.96154
0.94340
0.92593
0.90909
0.89286
0.87719
2
0.92456
0.89000
0.85734
0.82645
0.79719
0.76947
3
0.88900
0.83962
0.79383
0.75131
0.71178
0.67497
4
0.85480
0.79209
0.73503
0.68301
0.63552
0.59208
5
0.82193
0.74726
0.68058
0.62092
0.56743
0.51937
6
0.79031
0.70496
0.63017
0.56447
0.50663
0.45559
7
0.75992
0.66506
0.58349
0.51316
0.45235
0.39964
8
0.73069
0.62741
0.54027
0.46651
0.40388
0.35056
9
0.70259
0.59190
0.50025
0.42410
0.36061
0.30751
10
0.67556
0.55839
0.46319
0.38554
0.32197...
Present Value of $1 at 5% for 5 periods .78353 Present Value of $1 at 6%...
Present Value of $1 at 5% for 5 periods .78353 Present Value of
$1 at 6% for 5 periods .74726 Present value of $1 at 10% for 5
periods .62092 Present Value of $1 at 12% for 5 periods .56743
Present Value of $1 at 5% for 10 periods .61391 Present Value of $1
at 6% for 10 periods .55840 Present value of $1 at 10% for 10
periods .38554 Present Value of $1 at 12% for 10 periods .32197...
1 a) The present value of an annuity lasting 72 interest periods and paying $ 2,000...
1 a) The present value of an annuity lasting 72 interest
periods
and paying $ 2,000 at the beginning of each “k” interest periods
is
$ 9,538.60. Given that the effective interest rate per interest
period
is 3.6575%, find k.
1 b) Find an expression in terms of i(4) for the
accumulated value at the
end of the twenty-one years of an annuity that pays $ 400 at
the
beginning of each four-month period for 21 years. Your
expression should...
Use the following table, Present Value of an Annuity of 1 Period 8% 9% 10% 1...
Use the following table,
Present Value of an
Annuity of 1
Period
8%
9%
10%
1
0.926
0.917
0.909
2
1.783
1.759
1.736
3
2.577
2.531
2.487
A company has a minimum required rate of return of 9%. It is
considering investing in a project which costs $350000 and is
expected to generate cash inflows of $150000 at the end of each
year for three years. The net present value of this project is
$379650.
$75000.
$37965.
$29650.
Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18%...
Periods
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
12%
14%
15%
16%
18%
20%
1
0.990
0.980
0.971
0.962
0.952
0.943
0.935
0.926
0.917
0.909
0.893
0.877
0.870
0.862
0.847
0.833
2
0.980
0.961
0.943
0.925
0.907
0.890
0.873
0.857
0.842
0.826
0.797
0.769
0.756
0.743
0.718
0.694
3
0.971
0.942
0.915
0.889
0.864
0.840
0.816
0.794
0.772
0.751
0.712
0.675
0.658
0.641
0.609
0.579
4
0.961
0.924
0.888
0.855
0.823
0.792
0.763
0.735
0.708
0.683
0.636...
Present Value of $ 1 at 12% for 8 years = 0.404 Present Value of an...
Present Value of $ 1 at 12% for 8 years = 0.404
Present Value of an annuity at 12% for 8 years = 4.968
Future Value of $1 at 12% for 8 years = 2.476
Future Value of an annuity at 12% for 8 years = 12.3
Vargas Products has settled a lawsuit for patent infringement.
They will receive $60,000 per year for the next 8 years. They
intend to put that money aside for a large R & D...
Present Value of $ 1 at 12% for 8 years = 0.404 Present Value of an...
Present Value of $ 1 at 12% for 8 years = 0.404
Present Value of an annuity at 12% for 8 years = 4.968
Future Value of $1 at 12% for 8 years = 2.476
Future Value of an annuity at 12% for 8 years = 12.3
Vargas Products is considering a capital project. Project A has
net cash inflows of $56,000 annually for 8 years. What is the total
amount they would be willing to invest if their expected...
(a) What is the present value of $29,400 due 8 periods from now, discounted at 6%?...
(a) What is the present value of $29,400 due 8
periods from now, discounted at 6%? (Round answer to 2
decimal places, e.g. 25.25.)
(b) What is the present value of $29,400 to be
received at the end of each of 12 periods, discounted at 12%?
(Round answer to 2 decimal places, e.g.
25.25.)
------------------
Ivanhoe Company is about to issue $298,700 of 6-year bonds
paying an 11% interest rate, with interest payable semiannually.
The discount rate for such securities...
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