Present Value Tables
Present Value of $1 Present Value of an Annuity of $1

question 65

Multiple Choice

Present Value Tables
Present value of $1 $$\begin{array} { l l l l l l l } \text { Periads } & 4 \% & 6 \% & 8 \% & 10 \% & 12 \% & 14 \% \\1 & 0.962 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 \\2 & 0.925 & 0.890 & 0.857 & 0.826 & 0.797 & 0.769 \\3 & 0.889 & 0.840 & 0.794 & 0.751 & 0.712 & 0.675 \\4 & 0.855 & 0.792 & 0.735 & 0.683 & 0.636 & 0.592 \\5 & 0.822 & 0.747 & 0.681 & 0.621 & 0.567 & 0.519 \\6 & 0.790 & 0.705 & 0.630 & 0.564 & 0.507 & 0.456 \\7 & 0.760 & 0.665 & 0.583 & 0.513 & 0.452 & 0.400 \\8 & 0.731 & 0.627 & 0.540 & 0.467 & 0.404 & 0.351 \\9 & 0.703 & 0.592 & 0.500 & 0.424 & 0.361 & 0.308 \\10 & 0.676 & 0.558 & 0.463 & 0.386 & 0.322 & 0.270\end{array}$$ Present value of an annuity of $1 $$\begin{array} { l l l l l l l } \text { Periads } & 4 \% & 6 \% & 8 \% & 10 \% & 12 \% & 14 \% \\1 & 0.962 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 \\2 & 1.886 & 1.833 & 1.783 & 1.736 & 1.690 & 1.647 \\3 & 2.775 & 2.673 & 2.577 & 2.487 & 2.402 & 2.322 \\4 & 3.630 & 3.465 & 3.312 & 3.170 & 3.037 & 2.914 \\5 & 4.452 & 4.212 & 3.993 & 3.791 & 3.605 & 3.433 \\6 & 5.242 & 4.917 & 4.623 & 4.355 & 4.111 & 3.889 \\7 & 6.002 & 5.582 & 5.206 & 4.868 & 4.564 & 4.288 \\8 & 6.733 & 6.210 & 5.747 & 5.335 & 4.968 & 4.639 \\9 & 7.435 & 6.802 & 6.247 & 5.759 & 5.328 & 4.946 \\10 & 8.111 & 7.360 & 6.710 & 6.145 & 5.650 & 5.216\end{array}$$
-Refer to Present Value Tables. Coriander Company is considering a project with an initial investment of $426,800 in new equipment that will yield annual net cash flows of $80,000 and will be depreciated at $53,350 per year over its eight-year life. What is the internal rate of return?

• A) 6%
• B) 8%
• C) 10%
• D) 12%

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Definitions:

Market Supply Curve

A graphical representation showing the relationship between the price of a good and the total quantity supplied by all producers.

Production Technique

A method or process employed in the transformation of raw materials, components, or parts into finished goods ready for the market or subsequent processing.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at each price level.

Swimwear Market

The industry segment that deals with the production and sale of clothing designed for swimming and related activities.