Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,200,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 18%. The project would provide net operating income each year for five years as follows:   Sales   $ 2,800,000 Variable expenses   1,150,000 Contribution margin   1,650,000 Fixed expenses:     Advertising, salaries, and other fixed out-of-pocket costs $ 610,000   Depreciation 640,000   Total fixed expenses   1,250,000 Net operating income   $ 400,000   Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.   Required: 1. Compute the project's net present value. 2. Compute the project's simple rate of return. 3a. Would the company want Derrick to pursue this investment opportunity? 3b. Would Derrick be inclined to pursue this investment opportunity

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,200,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 18%. The project would provide net operating income each year for five years as follows:

 

Sales   $ 2,800,000
Variable expenses   1,150,000
Contribution margin   1,650,000
Fixed expenses:    
Advertising, salaries, and other fixed out-of-pocket costs $ 610,000  
Depreciation 640,000  
Total fixed expenses   1,250,000
Net operating income   $ 400,000

 

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.

 

Required:

1. Compute the project's net present value.

2. Compute the project's simple rate of return.

3a. Would the company want Derrick to pursue this investment opportunity?

3b. Would Derrick be inclined to pursue this investment opportunity?

EXHIBIT 12B-2
Present Value of an Annuity of $l in Arrears; 1/r(1-(1/(1+1)'n))
Periods
10%
8%
0.926
1.808 | 1.783
7%
0.935
4%
11%
21%
6%
0.952 0.943
5%
9%
25%
0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 | 0.840 0.833 0.826 0.820 0.813 0.806 0.800
1.605 | 1.585 1.566 | 1.547 1.528 | 1.509 1.492 | 1.474 | 1.457| 1.440
12%
13%
14%
15%
16%
17%
18%
19%
20%
22%
23%
24%
1
0.962
0.917
1.886 1.859
2.775 | 2.723 | 2.673 2.624 2.577 2.531 2.487 2.444 | 2.402 2.361 | 2.322 | 2.283 2.246 | 2.210 2.174 | 2.140 | 2.106 | 2.074 | 2.042 2.011 | 1.981 | 1.952
3.630 3.546 3.465| 3.387 | 3.312 3.240 | 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 | 2.494 2.448 2.404 2.362
4.452
5.242 5.076 4.917
6.002 5.786 | 5.582 | 5.389 5.206 5.033 4.868 4.712 | 4.564 | 4.423 4.288 | 4.160 4.039 3.922 3.812 3.706 | 3.605 | 3.508 | 3.416 | 3.327 | 3.242 3.161
6.733 6.463 6.210 5.971 | 5.747 5.535 | 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954| 3.837 3.726 | 3.619 3.518 3.421 3.329
7.435 7.108
8.111
8.760 8.306 7.887 7.499| 7.139 | 6.805 | 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656| 4.486 4.327 4.177| 4.035 3.902 3.776 3.656
9.385
9.986| 9.394 8.833
10.563 9.899 9.295
11.118 10.380 9.712
11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 | 5.954| 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887
2
1.833
1.759| 1.736 1.713 | 1.690 1.668
1.647 | 1.626
3
4
4.100 3.993 3.890 3.791 3.696| 3.605 3.517 3.433 3.352 3.274 | 3.199 3.127| 3.058 2.991 2.926 2.864 2.803 2.745 2.689
4.767 4.623 4.486 4.355 | 4.231 | 4.111 | 3.998 3.889 3.784 3.685 | 3.589 | 3.498 | 3.410 3.326 | 3.245 3.167 | 3.092 | 3.020 | 2.951
4.329
4.212
6.
7
6.247 5.995 5.759 5.537 5.328 5.132 4.946 | 4.772 | 4.607 4.451 4.303 4.163 4.031 3.905| 3.786 3.673 3.566 3.463
7.024 6.710 6.418 | 6.145 | 5.889 | 5.650 5.426 | 5.216 5.019 4.833 | 4.659 | 4.494 4.339 | 4.192 | 4.054 | 3.923 | 3.799 3.682 | 3.571
6.802
6.515
10
7.722
7.360
11
8.863 8.384
7.943 | 7.536 | 7.161 | 6.814 6.492 | 6.194 5.918 5.660 5.421 | 5.197 |4.988 4.793 | 4.611 4.439| 4.278 4.127 | 3.985 3.851 | 3.725
8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 | 5.118 | 4.910 | 4.715 4.533 4.362 4.203 4.053 3.912 | 3.780
8.745 8.244 7.786| 7.367 6.982 | 6.628 6.302 6.002 5.724 5.468 | 5.229 5.008 4.802 4.611
9.108 8.559 8.061
12
13
4.432 4.265 4.108 | 3.962 3.824
7.606 | 7.191| 6.811 | 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 4.153 | 4.001 | 3.859
14
15
16
17
12.166 11.274 10.477 9.763
9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910
18
12.659 11.690 10.828 10.059 9.372 | 8.756 8.201 | 7.702 7.250 | 6.840 6.467 6.128 | 5.818 | 5.534 5.273 | 5.033 4.812 | 4.608 4.419 | 4.243 | 4.080 3.928
13.134 12.085 11.158 10.336 9.604| 8.950 8.365 7.839 7.366 | 6.938 6.550 6.198 5.877 5.584 5.316 | 5.070 4.843 4.635 4.442 4.263 4.097| 3.942
13.590 12.462 11.470 10.594 9.818 | 9.129 8.514 7.963| 7.469| 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 | 4.110 3.954
14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075
14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645| 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970
14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718| 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 | 4.137 3.976
15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784| 7.283 6.835 6.434 6.073 5.746 5.451 | 5.182 4.937 4.713 | 4.507 4.318 | 4.143 3.981
15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 | 4.514 4.323 4.147 3.985
15.983 14.375 13.003 11.826 10.810 9.929 9.161 | 8.488 7.896| 7.372 6.906 | 6.491 | 6.118 | 5.783 5.480 5.206 4.956 | 4.728 4.520 | 4.328 | 4.151 | 3.988
16.330 14.643 13.211 11.987 10.935 10.027 9.237 | 8.548
|16.663 14.89813.406 12.137 11.051 10.116 9.307 8.602 7.984 | 7.441
16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7.470 6.983 6.551| 6.166 5.820 5.510 5.229 4.975 4.743 4.531 | 4.337 4.159 | 3.994
|17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995
|19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4.347 4.166 3.999
19
20
21
7.562 7.102 6.687 | 6.312 | 5.973 5.665 5.384 5.127 | 4.891 | 4.675 | 4.476 4.292 4.121 3.963
22
23
24
25
26
7.943 7.409 6.935 | 6.514 | 6.136 5.798 5.492 5.215 | 4.964 | 4.734 | 4.524 4.332 | 4.154 | 3.990
6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 | 4.528 4.335 4.157 3.992
27
28
29
30
40
Transcribed Image Text:EXHIBIT 12B-2 Present Value of an Annuity of $l in Arrears; 1/r(1-(1/(1+1)'n)) Periods 10% 8% 0.926 1.808 | 1.783 7% 0.935 4% 11% 21% 6% 0.952 0.943 5% 9% 25% 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 | 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1.605 | 1.585 1.566 | 1.547 1.528 | 1.509 1.492 | 1.474 | 1.457| 1.440 12% 13% 14% 15% 16% 17% 18% 19% 20% 22% 23% 24% 1 0.962 0.917 1.886 1.859 2.775 | 2.723 | 2.673 2.624 2.577 2.531 2.487 2.444 | 2.402 2.361 | 2.322 | 2.283 2.246 | 2.210 2.174 | 2.140 | 2.106 | 2.074 | 2.042 2.011 | 1.981 | 1.952 3.630 3.546 3.465| 3.387 | 3.312 3.240 | 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 | 2.494 2.448 2.404 2.362 4.452 5.242 5.076 4.917 6.002 5.786 | 5.582 | 5.389 5.206 5.033 4.868 4.712 | 4.564 | 4.423 4.288 | 4.160 4.039 3.922 3.812 3.706 | 3.605 | 3.508 | 3.416 | 3.327 | 3.242 3.161 6.733 6.463 6.210 5.971 | 5.747 5.535 | 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954| 3.837 3.726 | 3.619 3.518 3.421 3.329 7.435 7.108 8.111 8.760 8.306 7.887 7.499| 7.139 | 6.805 | 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656| 4.486 4.327 4.177| 4.035 3.902 3.776 3.656 9.385 9.986| 9.394 8.833 10.563 9.899 9.295 11.118 10.380 9.712 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 | 5.954| 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 2 1.833 1.759| 1.736 1.713 | 1.690 1.668 1.647 | 1.626 3 4 4.100 3.993 3.890 3.791 3.696| 3.605 3.517 3.433 3.352 3.274 | 3.199 3.127| 3.058 2.991 2.926 2.864 2.803 2.745 2.689 4.767 4.623 4.486 4.355 | 4.231 | 4.111 | 3.998 3.889 3.784 3.685 | 3.589 | 3.498 | 3.410 3.326 | 3.245 3.167 | 3.092 | 3.020 | 2.951 4.329 4.212 6. 7 6.247 5.995 5.759 5.537 5.328 5.132 4.946 | 4.772 | 4.607 4.451 4.303 4.163 4.031 3.905| 3.786 3.673 3.566 3.463 7.024 6.710 6.418 | 6.145 | 5.889 | 5.650 5.426 | 5.216 5.019 4.833 | 4.659 | 4.494 4.339 | 4.192 | 4.054 | 3.923 | 3.799 3.682 | 3.571 6.802 6.515 10 7.722 7.360 11 8.863 8.384 7.943 | 7.536 | 7.161 | 6.814 6.492 | 6.194 5.918 5.660 5.421 | 5.197 |4.988 4.793 | 4.611 4.439| 4.278 4.127 | 3.985 3.851 | 3.725 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 | 5.118 | 4.910 | 4.715 4.533 4.362 4.203 4.053 3.912 | 3.780 8.745 8.244 7.786| 7.367 6.982 | 6.628 6.302 6.002 5.724 5.468 | 5.229 5.008 4.802 4.611 9.108 8.559 8.061 12 13 4.432 4.265 4.108 | 3.962 3.824 7.606 | 7.191| 6.811 | 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 4.153 | 4.001 | 3.859 14 15 16 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 18 12.659 11.690 10.828 10.059 9.372 | 8.756 8.201 | 7.702 7.250 | 6.840 6.467 6.128 | 5.818 | 5.534 5.273 | 5.033 4.812 | 4.608 4.419 | 4.243 | 4.080 3.928 13.134 12.085 11.158 10.336 9.604| 8.950 8.365 7.839 7.366 | 6.938 6.550 6.198 5.877 5.584 5.316 | 5.070 4.843 4.635 4.442 4.263 4.097| 3.942 13.590 12.462 11.470 10.594 9.818 | 9.129 8.514 7.963| 7.469| 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 | 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645| 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718| 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 | 4.137 3.976 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784| 7.283 6.835 6.434 6.073 5.746 5.451 | 5.182 4.937 4.713 | 4.507 4.318 | 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 | 4.514 4.323 4.147 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 | 8.488 7.896| 7.372 6.906 | 6.491 | 6.118 | 5.783 5.480 5.206 4.956 | 4.728 4.520 | 4.328 | 4.151 | 3.988 16.330 14.643 13.211 11.987 10.935 10.027 9.237 | 8.548 |16.663 14.89813.406 12.137 11.051 10.116 9.307 8.602 7.984 | 7.441 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7.470 6.983 6.551| 6.166 5.820 5.510 5.229 4.975 4.743 4.531 | 4.337 4.159 | 3.994 |17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995 |19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4.347 4.166 3.999 19 20 21 7.562 7.102 6.687 | 6.312 | 5.973 5.665 5.384 5.127 | 4.891 | 4.675 | 4.476 4.292 4.121 3.963 22 23 24 25 26 7.943 7.409 6.935 | 6.514 | 6.136 5.798 5.492 5.215 | 4.964 | 4.734 | 4.524 4.332 | 4.154 | 3.990 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 | 4.528 4.335 4.157 3.992 27 28 29 30 40
EXHIBIT 12B-1
Present Value of $1; 1 (1+r) n
7%
9%
Periods
1
24% 25%
0.820 0.813 0.806 | 0.800
0.672 0.661 0.650 | 0.640
4%
5%
6%
8%
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
0.840 | 0.833 | 0.826
21%
22%
23%
0.962 0.952 0.943 0.935 0.926 0.917| 0.909 0.901 | 0.893 0.885 0.877 0.870 0.862 0.855
0.925
0.847
0.718 0.706 0.694 0.683
0.609 0.593 0.579 0.564 0.551 | 0.537 0.524 0.512
0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410
0.907
0.890 0.873 0.857 0.842 0.826 | 0.812 0.797 0.783 0.769 0.756 0.743 0.731
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
0.855 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
0.822 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 |0.386
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 0.319 | 0.303 0.289 0.275 0.262
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 0.333
0.731 0.677 0.627 |0.582 0.540 0.502 0.467
0.703 0.645 0.592 | 0.544 0.500 | 0.460 | 0.424 0.391 | 0.361 | 0.333 0.308 | 0.284 0.263 0.243
0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 | 0.322 0.295 0.270 0.247 0.227 0.208
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 0.123 | 0.112 | 0.103 | 0.094 0.086
0.625 0.557 0.497 0.444 0.397 | 0.356 0.319 0.286 0.257 0.231 | 0.208 0.187 0.168 | 0.152 0.137 0.124 | 0.112 0.102 0.092 0.083 | 0.076 0.069
0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 | 0.229 0.204
0.577 0.505 0.442 0.388 0.340 0.299 | 0.263 | 0.232 | 0.205 0.181
0.555 0.481 0.417 0.362 0.315 0275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 | 0.095
0.534 |0.458 0.394 0.339 0.292 |0.252 0.218 | 0.188 0.163 | 0.141 | 0.123 | 0.107 | 0.093
0.513 0.436 0.371 0.317 0.270 0.231 0.198 | 0.170 0.146 0.125 0.108 | 0.093 0.080 0.069
0.494 0.416 | 0.350 0.296 0.250 0.212 0.180 0.153 0.130 | 0.111 | 0.095 0.081 | 0.069 | 0.059 | 0.051 | 0.044 0.038 0.032 0.028 | 0.024 0.021 0.018
0.475 0.396 0.331 |0.277 0.232 0.194 0.164 0.138 0.116 | 0.098
0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 | 0.051 | 0.043
0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 | 0.093 0.077 | 0.064 0.053 0.044 0.037 0.031 | 0.026 0.022 0.018 | 0.015 0.013 | 0.011 0.009
0.422 0.342 0.278 0.226 0.184 |0.150 0.123 | 0.101 0.083 |0.068 0.056 | 0.046 | 0.038 0.032 | 0.026 0.022 0.018 0.015 | 0.013 | 0.011 | 0.009 0.007
0.406 0.326 0.262 | 0211| 0.170 0.138 0.112 0.091 | 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 0.012 | 0.010 0.009 0.007 0.006
0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.082 | 0.066 0.053 0.043 0.035 0.028 0.023
0.375 0.295 0.233 0.184 0.146 | 0.116 0.092 0.074 0.059 0.047
0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 | 0.021 | 0.017 0.014 0.011 | 0.009 0.007 0.006 0.005 | 0.004 0.003
0.347 0.268 0.207 |0.161 | 0.125 0.098 0.076 | 0.060
0.333 0.255 0.196 0.150 0.116 | 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 | 0.012 0.010 0.008
0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 0.014 | 0.011
0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 | 0.012 0.009
0.208 0.142 0.097 0.067 0.046 |0.032 0.022 | 0.015 0.011 | 0.008 0.005 | 0.004 | 0.003 0.002
3
4
5
0.370 0.355 0.341 | 0.328
6
0.314 0.296 0.279 | 0.263 0.249 |0.235 0.222 | 0.210
0.266 0.249 0.233 0.218 0.204 |0.191 0.179 0.168
0.225 | 0.209 0.194 0.180 0.167
0.191 0.176 0.162 0.149 0.137 | 0.126 0.116 | 0.107
0.434 | 0.404 | 0.376 |0.351 | 0.327 | 0.305 0.285
9
0.155 0.144 0.134
10
11
12
0.182 0.163 0.145 0.130
0.160 0.141 0.125
0.116 0.104 0.093
0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044
13
0.084
0.075
0.068 0.061| 0.055
14
0.111
0.074 0.065 0.057 0.051 0.045 0.040 0.035
0.042 0.036 0.032 0.028
15
0.084
0.071 0.062 0.054 0.047
0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023
16
0.081
17
18
0.043 0.037 0.031 0.027
0.037 0.031 0.026 0.022 0.019 | 0.016 0.014 0.012
19
0.083 0.070 0.060
0.051
0.023
0.020 0.017 0.014
20
21
22
23
0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005
0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004
24
25
0.038 0.030 0.024 | 0.020
26
0.004 0.003 0.002
0.002 0.002
0.047 | 0.037
0.029 | 0.023 | 0.018 | 0.014
0.007 | 0.006
0.006
27
0.011
0.009
0.005
28
0.005
0.004 | 0.003
0.008 0.006 0.005 0.004 0.003 |0.002 0.002 0.002
0.007 0.005 0.004 0.003
0.001 0.001 | 0.001 0.000 0.000 0.000 0.000 0.000
29
30
0.003 0.002 0.002 0.001
40
Transcribed Image Text:EXHIBIT 12B-1 Present Value of $1; 1 (1+r) n 7% 9% Periods 1 24% 25% 0.820 0.813 0.806 | 0.800 0.672 0.661 0.650 | 0.640 4% 5% 6% 8% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 0.840 | 0.833 | 0.826 21% 22% 23% 0.962 0.952 0.943 0.935 0.926 0.917| 0.909 0.901 | 0.893 0.885 0.877 0.870 0.862 0.855 0.925 0.847 0.718 0.706 0.694 0.683 0.609 0.593 0.579 0.564 0.551 | 0.537 0.524 0.512 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.907 0.890 0.873 0.857 0.842 0.826 | 0.812 0.797 0.783 0.769 0.756 0.743 0.731 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 0.855 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 0.822 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 |0.386 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 0.319 | 0.303 0.289 0.275 0.262 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 0.333 0.731 0.677 0.627 |0.582 0.540 0.502 0.467 0.703 0.645 0.592 | 0.544 0.500 | 0.460 | 0.424 0.391 | 0.361 | 0.333 0.308 | 0.284 0.263 0.243 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 | 0.322 0.295 0.270 0.247 0.227 0.208 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 0.123 | 0.112 | 0.103 | 0.094 0.086 0.625 0.557 0.497 0.444 0.397 | 0.356 0.319 0.286 0.257 0.231 | 0.208 0.187 0.168 | 0.152 0.137 0.124 | 0.112 0.102 0.092 0.083 | 0.076 0.069 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 | 0.229 0.204 0.577 0.505 0.442 0.388 0.340 0.299 | 0.263 | 0.232 | 0.205 0.181 0.555 0.481 0.417 0.362 0.315 0275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 | 0.095 0.534 |0.458 0.394 0.339 0.292 |0.252 0.218 | 0.188 0.163 | 0.141 | 0.123 | 0.107 | 0.093 0.513 0.436 0.371 0.317 0.270 0.231 0.198 | 0.170 0.146 0.125 0.108 | 0.093 0.080 0.069 0.494 0.416 | 0.350 0.296 0.250 0.212 0.180 0.153 0.130 | 0.111 | 0.095 0.081 | 0.069 | 0.059 | 0.051 | 0.044 0.038 0.032 0.028 | 0.024 0.021 0.018 0.475 0.396 0.331 |0.277 0.232 0.194 0.164 0.138 0.116 | 0.098 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 | 0.051 | 0.043 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 | 0.093 0.077 | 0.064 0.053 0.044 0.037 0.031 | 0.026 0.022 0.018 | 0.015 0.013 | 0.011 0.009 0.422 0.342 0.278 0.226 0.184 |0.150 0.123 | 0.101 0.083 |0.068 0.056 | 0.046 | 0.038 0.032 | 0.026 0.022 0.018 0.015 | 0.013 | 0.011 | 0.009 0.007 0.406 0.326 0.262 | 0211| 0.170 0.138 0.112 0.091 | 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 0.012 | 0.010 0.009 0.007 0.006 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.082 | 0.066 0.053 0.043 0.035 0.028 0.023 0.375 0.295 0.233 0.184 0.146 | 0.116 0.092 0.074 0.059 0.047 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 | 0.021 | 0.017 0.014 0.011 | 0.009 0.007 0.006 0.005 | 0.004 0.003 0.347 0.268 0.207 |0.161 | 0.125 0.098 0.076 | 0.060 0.333 0.255 0.196 0.150 0.116 | 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 | 0.012 0.010 0.008 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 0.014 | 0.011 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 | 0.012 0.009 0.208 0.142 0.097 0.067 0.046 |0.032 0.022 | 0.015 0.011 | 0.008 0.005 | 0.004 | 0.003 0.002 3 4 5 0.370 0.355 0.341 | 0.328 6 0.314 0.296 0.279 | 0.263 0.249 |0.235 0.222 | 0.210 0.266 0.249 0.233 0.218 0.204 |0.191 0.179 0.168 0.225 | 0.209 0.194 0.180 0.167 0.191 0.176 0.162 0.149 0.137 | 0.126 0.116 | 0.107 0.434 | 0.404 | 0.376 |0.351 | 0.327 | 0.305 0.285 9 0.155 0.144 0.134 10 11 12 0.182 0.163 0.145 0.130 0.160 0.141 0.125 0.116 0.104 0.093 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 13 0.084 0.075 0.068 0.061| 0.055 14 0.111 0.074 0.065 0.057 0.051 0.045 0.040 0.035 0.042 0.036 0.032 0.028 15 0.084 0.071 0.062 0.054 0.047 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 16 0.081 17 18 0.043 0.037 0.031 0.027 0.037 0.031 0.026 0.022 0.019 | 0.016 0.014 0.012 19 0.083 0.070 0.060 0.051 0.023 0.020 0.017 0.014 20 21 22 23 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 24 25 0.038 0.030 0.024 | 0.020 26 0.004 0.003 0.002 0.002 0.002 0.047 | 0.037 0.029 | 0.023 | 0.018 | 0.014 0.007 | 0.006 0.006 27 0.011 0.009 0.005 28 0.005 0.004 | 0.003 0.008 0.006 0.005 0.004 0.003 |0.002 0.002 0.002 0.007 0.005 0.004 0.003 0.001 0.001 | 0.001 0.000 0.000 0.000 0.000 0.000 29 30 0.003 0.002 0.002 0.001 40
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