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Dr. Helen Floss is the managing partner of the Crestwood Dental Clinic, Floss is trying to determine whether the clinic should move patient files and other items out of a spare room in the clinic and use the room for dental work. She has determined that it would require an investment of $384,000 for equipment and related costs to prepare the room for use. On the basis of receipts being generated from other rooms in the clinic, Floss estimates that the new room would generate a net cash Inflow of $85,300 per year The equipment purchased for the room would have a seven-year estimated useful life. Click here to view Exhibit:10-1 and Exhibit 10.2. to determine the appropriate discount factor(s) using tables Required: (ignore income taxes) 1. Compute the IRR on the equipment for the new room. Calculate the NPV of the equipment using the IRR you have computed as the discount rate. (Negative amounts should be indicated with a minus sign. Round discount factor(s) to 3 decimal places. Round other intermediate calculations and final answers to the nearest whole number. Roundup percentage answer to nearest whole number (.e., 0.123 should be considered as 12%).) Internal rate of retum Not present value 2. Although seven years is the average life for dental equipment, Floss knows that due to changing technology, this life can vary substantially. Compute the IRR if the life of the equipment is (a) five years and (b) nine years, rather than seven years. (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest whole number (.e., 0.123 should be considered as 12%).) Internal rate of return Five years Nine years 3. Refer to the original data. Assume that the equipment is purchased and that the room is opened for dental use. However, due to an increasing number of dentists in the area, the clinic is able to generate only $71,400 per year in net cash receipts from the new room. At the end of five years, the clinic closes the room and sells the equipment to a newly licensed dentist for a cash price of $104,400 Compute the IRR that the clinic earned on its investment over the five-year period. (Hint: A useful way to proceed is to find the discount rate that will cause the net present value of the investment to be equal to, or near, zero). (Round discount factor(s) to 3 decimal places. Round other intermediate calculations and final answers to the nearest whole number, Roundup percentage answer to nearest whole number (0.123 should be considered as 12%).) Internal rate of rolum Net present value EXHIBIT 10-1 Present Value of $1 F. P 145 245 205 45 105 305 55 LSS 255 os 205 105 0.006 0.794 0.701 0.769 0.71 1 0.9020952 0943 0.926 0.909 0.093 0.077 0.04 0.347 0.833 0.030 0933 0.907 0.90 0.37 0.036 0.797 079 0.74 0.713 0.694 0672 0.030 0.030 0.010 0.392 0.310 0.00 0.00 0.540 0.794 0751 0.713 0675 0541 0.609 0.379 0.351 0.324 0.500 0.677 0.455 0.367 0.655 0.025 0.792 0.735 0.663 0.636 0.392 050 0:316 0.452 0.451 0.43 0.397 0.373 0.250 0.360 0.03 0.754 0.747 0.341 3 0.001 0.021 0.567 0319 0470 0.437 0.40 0.370 0.315 0.291 0.100 0.269 . 0.790 0.746 0.703 0.630 0.564 0.507 0.456 0.410 0.370 0.333 0303 0.375 0.250 0.327 0.207 0.133 0.7600.11 0.003 0.313 0.313 0.450.400 0.354 0.14 0.279 0.349 0.233 0.190 0.125 0.139 0.093 0.731 0.677 0627 0340 0.467 0.404 0331 0.305 0.366 0.23 0.304 0.19 0.137 0.139 0.133 0.000 9 0.03 0.05 0392 0.500 0.434 0.301 0.30 0.363 0.335 0.19 0.167 0.144 0.125 0.100 0.094 0.040 10 0.676 0.014 0.350 0.463 0.3 0.32 0.003 0.191 0.163 0.137 0.116 0.099 0.003 0.073 0.033 11 0.630 0.365 0.337 0.439 0.330 0.37 0.3390193 0.16 0.133 01120094 0079 0.000 0.056 0.035 0.633 0.357 0.497 0.17 0.19 0.357 0.000 1000137 0.1120093 0.076 0.00 0.052 0043 001S 0.001 0.530 0.0 0.0 0.0 0.329 0152 0.14 0.116 0.093 0.093 0001 0.05000100033 0013 0.377 0.505 0.4 0.346 030 0.30 0.16 0.125 0.000 0.00 0.003 0019 0.039 0.032 0.035 0.009 15 0.335 0.451 0.417 0313 0.39 0.15 0.10 0.106 0.004 0.063 001 0010 0.031 0.035 0030 0.000 10 0.534 0:4510.394 0.392 0.313 0.16 0.133 0093 0.071 0.054 0043 0.032 0.035 0.019 0.013 0.003 17 0.313 0.456 0371 0.210 0.100.101000000 0.000 0.045 0.034 0.030 0030 0.0130012 0.003 10 0.491 0 4100 350 0.250 0.130 0.1300093 0.00 0.035 0.035 0.030 0021 0016 0012 0.009 0.003 19 0 473 0.39 0.31 0.23 0.161 0.116 0.003 0.000 0.04 0.001 0.023 0.017 0012 0009 0.007 0.003 50 0450 0.371 0.313 0.313 0.19 0.1040073 0031 0.037 0.036 0.019 0.014 0.010 0007 0.003 0001 0.439 0.33 0.29 0.19 0.135 0.0930054 00 0.0310093 0.0130011 0000 0.000 0.001 0.001 0.431 0.343 0.271 0.134 0.133 000 000 0030 0.036 013 0.013 0.000 0.000 0.004 0.003 0.001 0.400 0.336 0.302 0.17001120074 00 0033 0.021 0.0130010 0.007 0.005 0.003 0.000 0.90 0.30 0.347 0.15 0.1020.006 0.0430023 0.019 0.0130000 0.000 0.00 0.003 0.003 0.375 033 0353 0.116 0092005000500034 0.00 0.00 0.007 0.003 0.003 0.003 0.001 0361 0.30 0.250 0.135 00040053 0.033 0031 0.014 0.0090006 0.00 0.00 0.003 0001 0.341 03000307 01230076 004 0.029 DO 0.11 0.007 0.003 0.003 0.003 0.001 0.001 0.333 0.33 0.19 0.116 000 000 000 160.00 0.00 0.004 0.003 0.002 0.001 0.31 0.343.165 0.1070.063 003 002 001 0.0000005 0.003 0.001 0.002 0.001 0.001 30 0.1540099 0057 0033 0.000 0012 0.007 0.004 0.003 0.000000 49 0.30301 000 000 000 00110.000 0.001 0.003 0.001 0.001 EXHIBIT 10-2 Present Value of an Annuity of 57 lu *** 48 Period 55 65 95 SIDE 1 0.962 0952 0.943 0.926 2 1.336 COST 1.733 1.359 2.723 3 2.775 2577 2673 3.465 + 3.6.30 3516 5 4330 4212 3.993 4452 5.242 6 5076 4917 4.633 7 6002 5.786 5303 5.206 6.463 6.733 6210 5.747 CLOT 9 7.435 7.100 6302 10 3.11 7.722 7360 6.710 3.544 11 3.760 5.306 7139 7007 3.354 B.063 7536 13 9956 9.394 7.904 14 9399 9.95 10.563 ILIS 11652 15 9713 S.559 105 125 145 165 185 205 225 245 235 20 0.909 0.5930377 0.363 0.347 033 0.0200.000 0.794 0.750 0.709 0714 1.736 1.690 1617 1.605 1 566 1535 1492 1457 1404 1361 134 2.487 2.4032392 2246 2.174 2.1063042 1981 1993 10. 1316 7:39 3.170 3.037 2914 2.793 2.90 3.559 249 2404 2320 2241 2.1661219 3.791 3.605 3.433 3.374 3.127 3991 2.31 2.74526353.553 3035 4355 3.599 3.605 3.493 3336 3.167 3020 3.555 2.739 2545 2.16 4564 3603 3.416 3.243 3063 2.937 2.303 3363 3.333 +963 +6394.344 3337 3.619 321 3.341 30763935 2331 5.750 5.330 4916 4.607 43034031 3.7963566 3366 3.134 3019 2379 0.145 5.650 5216 4.333 4.94 4.192 393336023.403 3269 3.09 2.414 6.495 5935 5453 3.029 4656 035 3.776 3.335 3.147 213 6.14 6.194 5.660 5.197 4.793 1230 127 385 3.606 3.357 3.190 2456 7.103 6.434 3.342 343 4910 4513 J912 363 3.427 33 34 7.367 6.6206.002 3.463 3003411 4365 3962 305 34593319 277 7.606 6.311 6142 5.575 5.093 475 43154001 3.736 7.534 6974 6.265 5.669 5.162 730 4357 4033 3.731 3.503 333 098 7130 6373 5739 5233 4.391 40593.771 3.5133295 293 7.250 6.467 5.11 5.273 3.75 3.509 3304 394 11365 7.3666350 571 5316 3.299 3.5993311249 SIST 7.469 0.0.33 5.9295353 2570 4.60 110 3.000 354332007 7.563 0.667 5973 5.354 4091 4476 4121 38163351 72 7645 6743 6011 5.410 1909 44504103103556 3333290 6.793 601 5.432 4925 4400137 357 358 3530 395 7.754 6.535 6:07) 5.451 1937 4307 2017 7543 073 60973.407 451 147 33343539 2.200 7.596 6906 6113 5450 456 4520 4151 3.137 3500 3350 2.500 9.337 103 60356 1365-1934.335 4154359 9307 7.94 691 615055039704304137 3.50 330 331 370 3022 900 le 3310 2975 4531 41593341 356 233 2.500 Boss 7003 177 531744334 100 350 35 3779 7105 45540 49974304410345 331 332.500 10.300 10.030 5.951 16 10.106 17 12.166 10.477 11.374 11 690 9132 9373 OCD 10.036 12659 13.134 LOT 9.604 10 12.005 12.462 1150 11.470 9.IS 20 13.590 4029 21 12021 LIODI 11764 1204 10.301 14.657 13.163 13.499 13.799 12 303 12550 15347 10371 10.329 10075 15 623 15.933 13003 13.011 10 SIO 10.935 51% 16330 16.63 14 375 14.643 14.093 15.141 13.00 13591 16954 11 051 11.130 11253 1935 15 373 30 20 15 046

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