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'ahoo Finance oTube ETRADE Financial IMI Earnings Calendar FINVIZ Stk Screener TradingViewWater & Power a Home | SoCalGas mework Interstate Manufacturing is considering either replacing one of its old machines with a new machine or having the old machine overhauled. Information aboutthe two alternatives follows. Management requires a 10% rate of return on its investments. Use the of Si. FV of S1. PVA of S1. andFVA of Si (Use appropriate factor(s) from the tables provided.) Alternative 1: Keep the old machine and have it overhauled. If the old machine is overhauled, it will be kept for another five years and then sold for its salvage value. Cost of old machine Cost of overhaul Annual expected revenues generated Annual cash operating costs after overhaul Salvage value of old machine in 5 years $119,080 141,800 94,000 42,000 17,000 / 2 old machine and buy a new one. The new machine is more efficient and will yleld substantial operating cost savings with more product being produced and sold. Cost of new machine Salvage value of old machine now Annual expected revenues generated Annual cash operating costs Salvage value of new machine in 5 years 304,000 44,000 117,000 26,000 13,000 Required: Initial cash investment (net) Subsequent Year Cash inflow x Table factorPresent Value (outflow 0 Determine the net present value of alternative 2 Initial cash investment (net) Subsequent Year Cash inflowx Table factorPresent Value (outflow) Now 3. Which alternative should management select? TABLE B. Present Value of 1 Rate 0.9901 09804 0.9615 09524 09434 09346 0.9259 0,9174 09091 08929 08696 09803 0.9612 09426 0.92460.9070 0.8900 08734 08573 0.8417 08264 07972 0.7561 09706 09423 0.9151 0 8890 0.8638 08396 0.8163 0.7938 07722 7513 07118 O 6575 0.9610 0.9238 08885 0.8548 0.8227 0.7921 0.7629 0.7350 708 06830 0,6355 05718 5 0.9515 0.9057 0.8626 08219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 6 0.9420 08880 08375 0.7903 0.7462 0,5674 04972 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 51 0.6227 05835 0.5470 05132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 06768 06274 0.5820 0.5403 .019 0.4665 0.4039 0.3269 0.5002 0.4604 0.4241 0.3606 0.2843 08203 0.7441 0.6756 06139 0.5584 05083 0.4632 0.4224 03855 0.3220 02472 0.3505 0.2875 0.2149 12 0.8874 0.7885 0.7014 06246 0.568 0.4970 0444 0.3971 0.3555 03186 02567 0.189 0.9143 0.8368 0.7664 0.7026 0.6446 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 04150 0.3677 0.3262 o 0.8700 0.7579 0.6611 05775 05051 0.4423 0.3878 0.3405 0.2992 02633 2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 02745 0.2394 0,1827 0.1229 0.8528 0.7284 0.6232 0.5339 04581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7 142 0.6050 0.5134 0.4363 0.3714 0.3166 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 02765 0.2317 0.1945 0.1635 0.7798 0.6095 0.4776 0.3751 02953 0.2703 0.2311 0.1978 0.1456 0.0929 0.7002 0.5874 04936 0.4155 035030.2959 0.2502 02120 0.1799 0.1300 0.0808 20 0.8195 0,6730 0.5537 0.4564 0.3769 0.3118 02584 0.2145 0.1784 0.1486 0.1037 0.0611 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 00304 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 0.1314 00994 0.0754 00573 0.0334 00151 7059 .000 0.3554 02534 0.1813 .1301 00937 0.676 0.0490 0.0356 00189 00075 0.6717 0.4529 0.3066 0.2083 0.1420 00972 0.0668 0.0460 0.0318 00221 00107 00037 Used to compule the from today ? Using the factors of t present value of a known fulure amount, For example: Hosw much would you need to imest today at 1%comounked semsiannually to acumulale $5000 in 6 years 2 aal i 5% ( 1 2 semiannual pends and a semiannual rae of 5% 1,1 TABLE B.2 Future Value of 1 Rate Periods 1% 4% o 1.0000 10000 1.0000 1.0000 1.0000 10000 1000010000 1.0000 1.0000 1.0000 1.0100 1.0200 10300 1.0400 10500 1060007 10800 0900 1.1000 11200 1.0201 10404 1.06091.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100 1.2544 .3225 1.0303 1.0612 10927 1.1249 11576 1.19101.2250 2597 1.2950 1.3310 1.4049 1.0406 1.0824 1.1255 1.1699 12155 1.2625 1.3108 1.3605 1.4116 1.7490 1.0510 1.1041 1.1593 1.2167 12763 1.3382 14026 14693 15386 1.6105 1.7623 1.0721 1.1487 12299 13159 1407115036 1.6058 1138 1,8280 1,9487 2210 6 1.0615 1.1262 11941 1.2653 1.3401 1.4185 1.5007 15869 1.6771 2.6600 3.0590 8 10829 1.1717 1.2668 13686 14775 15938 1.7182 18509 1.9926 2.1436 9 1.0937 1.1951 1.3048 14233 1.5513 1689518385 1.9990 1.1157 1.2434 1.3842 1.5395 1.7103 18983 2.1049 2.3316 2.5804 1.2190 1.3439 14802 1.6289 1908 1.9672 21589 2.3674 25937 3.1058 2.8531 3.4785 4.6524 5.3503 12 1.12681.2682 1.4258 16010 1.7959 20122 22522 25182 28127 3.1384 13 1.1381 1.2936 1.4685 14 1.1495 1.3195 15126 1.7317 1.9799 2.2609 2 6651 18856 2.1329 2.4098 27196 3.0658 3.4523 4.3635 2.5785 2.9372 3.3417 3.7975 4.8871 7.0757 1.1610 1.3459 1.5580 18009 20789 2.3966 27590 3.1722 36425 4.1772 5.47 2.9522 3.4259 3.9703 4.5950 6.1304 17 1.1843 1.4002 1.6528 1.9479 2.2920 26928 3.1588 3.7000 4.3276 18 1.1961 14282 1.7024 20258 2.4066 2.8543 3.3799 3 9.3576 5.0545 6.8660 10.7613 3.9960 4.7171 5.5599 7.6900 12.3755 20 1.2202 14859 18061 21911 2.6533 3.2071 3.8697 46610 5.6044 6.7275 9.6463 6.3665 30 1.3478 18114 2.4273 32434 4.3219 57435 76123 10.0627 13.2677 17.4494 29.9599 66.2118 1.2081 14568 1.7535 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 6.1159 8.6128 14.2318 1.2824 1.6406 20938 26658 3.3864 4.2919 5.4274 6.8485 8.6231 10.8347 17.0001 32.9190 1.4166 1.9999 2.8139 3.9461 55160 76861 10.6766 14.7853 20.4140 28.1024 52.7996 133.1755 1.4889 2.2080 3.2620 4.8010 7.0400 102857 14.9745 21.7245 31.4094 45.2593 93.0510 267.8635 value of S3,000 me I d 1 day at % c mp and quartert kr s year? Using Used to compute the future value of a known the factors of ,v 20 and resent a mount. For etan ple what is the a cum ale i 2% (20 quarterly periods and a quarterly inierest rate of 2%) the factor is 1.4859 The accumulated value is S4,457.70 Sox) x L4859). TABLE B.3 Present Value of an Annuity of 1 Rate 2% 4% 5% 6% 10% 12% 15% 0.9901 0.9804 0.9709 09615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 17591 1.7355 1.6901 1.6257 2.9410 2.8839 2.8286 27751 2.7232 2.6730 2.6243 2.5771 2.5313 2.48692.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 5 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 39927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.111 3.7845 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 48684 4.5638 4.1604 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 5.9377 5.2337 112551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 68137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 83577 79038 7.4869 7.1034 6.4235 5.5831 13.0037 1 5.7245 3.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 85595 8.0607 7.6061 6.8109 5.8474 16 14.7179 13.5777 125611 11.6523 08378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 126593 116896 10.8276 10.0591 9.3719 8.7556 8.2014 72497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.950 83649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 105940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 116536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 124090 112578 10.2737 9.4269 8.0552 65660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 129477 11.6546 10.5668 9.6442 8.1755 6.6166 40 32.8347 27.3555 23.1148 19.7928 151 150463 13.3317 119246 10.7574 9.7791 8.2438 6.6418 2.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 Used to calculate the prese nt value of a series of equal payments made at the end of each period. For example: What is the present valas of $2.000 per year for 10 years assuming IO, '-9%), the PV 4177. $2.000 Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 6% 8% 9% 10% 12% 15% 10000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 10000 22.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 3 3.0301 30604 30909 3.1216 3.1525 3.1836 3.21493.2464 3.27813.3100 3.3744 4 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.75075.8666 5.9847 6.1051 6.3528 6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 72135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.92289.2004 9.4872 10.0890 11.0668 8 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 13.7268 9 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.548720.3037 11 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 20.6546 24.3493 12 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 5 16.0969 17.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 17 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.544748.8837 650751 18 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 25 28.2432 32.0303 36.4593 41.6459 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 30 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 35 41.6603 49.9945 60.4621 736522 90.3203 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635881.1702 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1.779.0903 Used to calculale the future value of a series of equal payments made at the end of each period. For example: What is the future value of S4,000 per year for 6 years assuming an annual interesi rate of 8%. For (rs 6, i 8%), te FV f tor as 7.3359. S4000 per year for 6 years accumulates to S29,34MO ($4,000 x ,3359)

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