Figure 14-11
Present Value of an Annuity of $1 in Arrears

question 47

Essay

Figure 14-11
Present value of an annuity of $1 in arrears
$\begin{array}{|c|l|l|l|l|l|l|}\hline \text { Periods } & 4 \% & 6 \% & 8 \% & 10 \% & 12 \% & 14 \% \\\hline 1 & 0.962 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 \\\hline 2 & 1.886 & 1.833 & 1.783 & 1.736 & 1.690 & 1.647 \\\hline 3 & 2.775 & 2.673 & 2.577 & 2.487 & 2.402 & 2.322 \\\hline 4 & 3.630 & 3.465 & 3.312 & 3.170 & 3.037 & 2.914 \\\hline 5 & 4.452 & 4.212 & 3.993 & 3.791 & 3.605 & 4.433 \\\hline 6 & 5.242 & 4.917 & 4.623 & 4.355 & 4.111 & 3.889 \\\hline 7 & 6.002 & 5.582 & 5.206 & 4.868 & 4.564 & 4.288 \\\hline 8 & 6.733 & 6.210 & 5.747 & 5.335 & 4.968 & 4.639 \\\hline 9 & 7.435 & 6.802 & 6.247 & 5.759 & 5.328 & 4.946 \\\hline 10 & 8.111 & 7.360 & 6.710 & 6.145 & 5.650 & 5.216 \\\hline\end{array}$
-Refer to Figure 14-11.Waterfall Country Club Company is considering two projects.
Waterfall requires a minimum rate of return of 8%.
$\begin{array}{lrr}&\text { Golf Course } & \text { Clubhouse } \\&\text { Upgrade } & \text { Upgrade }\\\text { Initial investment } & \$ 500,000 & \$ 100,000 \\\text { Annual cash flows } & \$ 88,500 & \$ 34,320 \\\text { Life of the project } & 10 \text { years } & 4 \text { years } \\\text { Depreciation per year } & \$ 50,000 & \$ 25,000\end{array}$ A. What is the accounting rate of return for each project?
B. What is the net present value for each project?
C. What is the internal rate of return for each project?
D. Which project should be chosen? Explain your reasoning.

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Definitions:

Strategic Performance Measurement System

A framework to track and evaluate an organization's performance against its long-term strategic goals.

Performance Measurement System

A performance measurement system is a set of metrics used to quantitatively gauge an organization's performance over time towards its goals.

Eco-Efficiency Measures

Eco-efficiency measures are strategies implemented by companies to enhance their environmental performance while simultaneously improving cost efficiency.

Triple Bottom Line

A sustainability framework that evaluates a company's performance according to its impact on people, planet, and profit.