The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $60,465 and annual net cash flows of $15,000 for each of the nine years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a.  Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round your answer to three decimal places. b.  Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal. %

For the sinking fund, use Table 12-1 to calculate the amount (in $) of the periodic payments needed to amount to the financial objective (future value of the annuity). (Round your answer to the nearest cent.) Sinking Fund Payment $ 27658 x Payment Frequency every year Time Period (years) 14 Interest Nominal Rate (%) Compounded annually 8 Future Value (Objective) $750,000

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blem #1: $10,000 is used to purchase an appropriate size annuity that has level annual payments for 18 years. The price of the annuity is based on an effective annual rate of 11.2%. As each payment is received, it is put into a fund that earns an effective annual rate of 7%. (a) Determine the accumulated value of the investment at the end of 18 years. (b) If the $10,000 were put into a fund that was to produce the same final value after 18 years, what annual effective rate would that fund have to offer?

Use the sinking fund formula shown to the right to determine the semiannual payments with 8% interest are compounded semiannually for 4 years to accumulate $24,000.

The following is a sinking fund schedule (depicted below) for a loan of $3000 repaid over four years with an annual effective interest rate of 4%. Please find the value of A, B, C, and D

This question is based on the following information: Each of the three independent investments below has a life of 10 years. The cost of capital for the 3 investments is 14%. The PV of an annuity of P 1 for 10 years at 14% is 5.216. Amount (O) Annual cash inflows (I) Net present value (NPV) Investment A P449,400 P 100,000 ? Investment B ? 70,000 13,800 Investment C 198,208 ? 36,512 The amount of investment for investment B isA. P 351,320B. P 351,230C. P 350,000D. P 315,320

Keystone Healthcare Corp. is proposing to spend $101,700 on a 10-year project that has estimated net cash flows of $18,000 for each of the 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a.  Compute the net present value, using a rate of return of 15%. Use the table of present value of an annuity of $1 presented above. If required, round to the nearest dollar. Use the minus sign to indicate a negative net present value. Present value of annual net cash flows $ Less amount to be invested $ Net present value $ b.  Based on the analysis prepared in part (a), is the rate of return (1) more than…

Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $29,488 to be accumulated in 5 years; quarterly payments of $1275. %- The interest rate needed is approximately (Type an integer or decimal rounded to two decimal places as needed.)

Lanham Incorporated recently invested in a project with a 3-year life span. The net present value was $9,000 and annual cash inflows were $21,000 for year 1; $24,000 for year 2; and $27,000 for year 3. The initial investment for the project, assuming a 15% required rate of return, was   Year Present Value  of 1 at 15%  PV of an Annuity    of 1 at 15%       1 .870 .870   2 .756 1.626   3 .658 2.283