Carter Company is considering a project with an initial investment of $600,500 that is expected to produce cash inflows of $131,000 for ten years. Carter's required rate of return is 16%. (Click on the icon to view Present Value of $1 table.) (Click on the icon to view Present Value of Ordinary Annuity of $1 table.) 14. What is the NPV of the project? 15. What is the IRR of the project? 16. Is this an acceptable project for Carter? 14. What is the NPV of the project? (Enter the factor amount to three decimal places, XXXX. Round the present value of the annuity to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.) Net Cash Annuity PV Factor Inflow (i=16%, n=10) Present Value Years 1- 10 Present value of annuity Investment Net present value
Carter Company is considering a project with an initial investment of $600,500 that is expected to produce cash inflows of $131,000 for ten years. Carter's required rate of return is 16%. (Click on the icon to view Present Value of $1 table.) (Click on the icon to view Present Value of Ordinary Annuity of $1 table.) 14. What is the NPV of the project? 15. What is the IRR of the project? 16. Is this an acceptable project for Carter? 14. What is the NPV of the project? (Enter the factor amount to three decimal places, XXXX. Round the present value of the annuity to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.) Net Cash Annuity PV Factor Inflow (i=16%, n=10) Present Value Years 1- 10 Present value of annuity Investment Net present value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Carter Company is considering a project with an initial investment of $600,500 that is expected to produce cash inflows of $131,000 for ten years. Carter's
required rate of return is 16%.
E (Click on the icon to view Present Value of $1 table.)
(Click on the icon to view Present Value of Ordinary Annuity of $1 table.)
14.
What is the NPV of the project?
15.
What is the IRR of the project?
Is this an acceptable project for Carter?
16.
14. What is the NPV of the project? (Enter the factor amount to three decimal places, X.XXX. Round the present value of the annuity to the nearest whole dollar.
Use parentheses or a minus sign for a negative net present value.)
Annuity PV Factor
(i=16%, n=10)
Net Cash
Present
Years
Inflow
Value
1- 10
Present value of annuity
Investment
Net present value
Transcribed Image Text:T12
- X
- X
Reference
Reference
Cart
er's required rate of return is
Present Value of Ordinary Annuity of $1
Present Value of $1
Periods
Period 1
Period 2
Period 3
Period 4
Period 5
Periods
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
12%
14%
15%
16%
18%
20%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
12%
14%
15%
16%
18%
20%
14.
Period 1
Period 2
Period 3
Period 4
Period 5
0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877
0.862 | 0.847 0.833
1.605 1.566 1.528
2.246 2.174 2.106
2.798 2.690 2.589
0.990 0.980 0.971 0.962 0.952 0.943
0.980 0.961 0.943 0.925 0.907 0.890 0873
0.971 0.942 0.915 0.889 0.864 0.840 0.816
0.961 0.924 0.888 0.855 0.823 0.792 0.763
0.951 0.906 0.863 0.822 0.784 0.747 0.713
0.909 0.893 0.877 | 0.870 0.862 0.847 0.833
0.926 0.917
0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694
0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0579
0.735 0.708 0.683 0.636 | 0.592 0.572 0.552
0.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402
0.990
0.980
0.971
0.962
0.870
0.935
15.
1.970| 1.942
1.913
1.886 1.859 | 1.833 1.808
1.783 1.759 1.736 1.690 1.647
1.626
2.723 2.673 2.624 2.577 2,531| 2487 | 2402 | 2.322
3,546 3.465 3.387 | 3.312 | 3.240| 3.170 | 3.037 2.914
4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.991
16.
2.941
2.884
2.829
2.775
2.283
3.902 3.808 3.717
3.630
2.855
0.516 0.482
14.
ple dollar. Use parentheses o
4.623 4.486 4.355 4.111 3.889 3.784
5.206 5.033 4.868 4.564 4.288
Period 6
Period 7
Period 8
Period 9
Period 10
Period 6
Period 7
Period 8
Period 9
5.795 5.601
6.728 6.472 6.230 | 6.002 | 5.786 5.582 5.389
5.417 5.242 5.076 4.917 4.767
0.942 0.888 0.837 0.790 0.746 0.705 0.666
0.933 0.871 0.813 0.760 0.711 0.665 0.623
0.923 0.853 0.789 0.731 0.677 0.627 0.582
0.914 0.837 0.766 0.703 0.645
0.630 0.596 | 0.564 0.507 0.456 0.432 0.410 0.370 0.335
0.547 0.513 0.452 0.400 0.376 0.354 | 0.314 0.279
0.502 0.467 0.404 0.351 0.327 0.305 0.266 0.233
0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194
0.322 | 0.270 0.247
3.685 3.498 3.326
4.160
4.039 3.812 3.605
0.583
Ye
7.652 7.325 7.020 | 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487
8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772
7.722 7.360 7.024
4.344
4.078 3.837
0.540
0.592 0.544
0.558 0.508
4.607
4.303 4.031
0.500
9.471| 8.983
8.530
8.111
6.710 6.418 6.145 5.650 5.216 | 5.019
4.833
4.494
4.192
Period 10 0.905 0.820 0.744 0.676 0.614
0.463
0.422 | 0.386
0.227 0.191 0.162
10.368 9.787 9.253
Period 11
Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444
Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.0093
Period 14
Period 15
Period 16 0.853 0.728 0.623 0.534 0.458 0.394
Period 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317
Period 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296
Period 19 0.828 0.686 | 0.570 0.475 0.396
Period 20
0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135
8.760 8.306 7.887 7.499| 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.327
9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660
0.896 0.804 0.722 0.650 0.585 0.527 0.475
Period 11
Period 12 11.255 10,575 9,954
Period 13
Period 14
Period 15
0.429
5.421
5.197 4.793 4.439
0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112
12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 4.910 4.533
13.004 12.106 11.296 10.563 9.899 9.295 8.745
13.865 12.849 11.938 11.118 10.380 9.712 9.108
8.244 7.786 7.367 6.628 6.002
8.559 8.061 7.606| 6.811 6.142
0.870 0.758 0.661 0.577 0.505 0.442
0.861 0.743 0.642 0.555 0.481
0.340 0.299| 0.263 0.205 0.160 0.141 0.125 0.099 0.078
0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065
5.724
5.468
5.008 4.611
0.388
5.847
5.575 5.092 4.675
0.417 0.362
Period 16
Period 17
Period 18
Period 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 6.198
Period 20
14.718 13.578 12.561 11.652 10.838 10.106 9.447
15.562 14.292 13.166 12.166 11.274 10.477 9.763
16.398 14.992 13.754 12.659 11.690 10.828 10.059
8.851 8.313 7.824 6.974 6.265| 5.954 5.669 5.162 4.730
9.122 8.544 8.022 7.120 6.373 6.047 5.749
9.372 8.756 8.201 7.250 6.467 6.128
0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054
0.231 0.198 0.146 0.108 0.093 0.080 | 0.060 0.045
0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038
0.194 0.164 | 0.116 0.083 0.070 0.060 0.043
0.339
0.292
5.222 4.775
0.270
5.818
5.273 4.812
0.250
0.331 0.277
0.312 0.258
5.877 5.316 4.844
0.232
0.031
18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6.259 5.929
5.353 4.870
0.820 0.673 0.554 0.456 0.377
0.215
0.178 0.149 0.104 0.073 0.061
0.051 0.037
0.026
Period 21 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 5.973 5.384 4.891
Period 22 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.442 8.772 7.645 6.743 | 6.359 6.011 5.410 4.909
Period 23 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580| 8.883 | 7.718 6.792
Period 24 21.243 18.914 16.936 15.247 13.7g9 12,550| 11.469 10.529| 9.707| 8.985 7.784| 6.835
Period 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873| 6.464
6.044 5.432| 4.925
6.073 | 5.451 4.937
6.097 | 5.467 4,948
Period 21 0.811 0.660 0.538 0.439 0.359 0.294 0.242
Period 22 0.803 0.647 0.522 0.422 0.342 0.278 0.226
Period 23 0.795 0.634 0.507 0.406 0.326 0.262 0.211
Period 24 0.788 0.622 0.492 0.390 0.310 | 0.247 0.197
Period 25 0.780 0.610 0.478 0.375 | 0.295 0.233 0.184
0.199 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.022
0.184 0.150 | 0.123 | 0.083 | 0.056 0.046 | 0.038 0.026 0.018
0.138 0.112 0.074 0.049 0.040 0.033 | 0.022 0.015
0.126 0.102 0.066 0.043 0.035 0.028
0.116 0.092 0.059 0.038 0.030 0.024
6.399
0.170
6.434
0.158
0.019
0.013
0.146
0.016 0.010
Period 26 22.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 9.929 9.161| 7.896 6.906 6.491
Period 27
Period 28 24.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 6.961 6.534
Period 29 25.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.022 6.983 | 6.551 6.166 5.510 4.975
Period 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427
6.118| 5.480 4.956
Period 26
Period 27
Period 28 0.757 0.574 0.437 0.333 0.255 0.196 | 0.150
Period 29 0.749 0.563 0.424 0.321 0.243
Period 30 0.742 0.552 0.412 0.308 | 0.231
0.772 0.598 0.464 0.361 0.281 0.220 0.172
0.764 0,586 0.450 | 0.347 0.268 0.207 0.161
0.135 0.106 0.084 0.053 0.033 0.026 0.021 0.014 0.009
0.098 0.076 0.047 0.029 0.023 0.018 0.011 0.007
0.090 0.069 0.042 0.026 0.020
0.082 0.063 0.037 0.022 0.017 0.014 | 0.008 0.005
0.075 0.057 0.033 0.020 0.015 0.012 | 0.007 0.004
23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 7.943 6.935 6.514
6.136 5.492 4.964
0.125
6.152
5.502 4.970
0.116
0.016 0.010 0.006
0.185 0.141
0.174 0.131
0.107
8.055 7.003 | 6.566 6.177
5.517 4.979
0.099
Period 40
32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779
8.244 7,105
6.642
6.233
5.548 4.997
Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.067
0.046 0.032 0.022 0.011 0.005 0.004 0.003 0.001
0.001
Period 50 39.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 7.133 6.661
6.246
5.554 4.999
Period 50 0.608 0.372 0.228 0.141 0.087
0.054 0.034
0.021
0.013 0.009
0.003 0.001| 0.001 0.001
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