Answer Happy

Use the NPV method to determine whether Stenback Products should invest in the following projects: Project A costs $270,000 and offers eight annual net cash inflows of $56,000. Stenback Products requires an annual return of 14% on projects like A. Project B costs $395,000 and offers nine annual net cash inflows of $74,000. Stenback Products demands an annual return of 12% on investments of this nature. (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value table.) (Click the icon to view the future value annuity table.) Requirement What is the NPV of each project? What is the maximum acceptable price to pay for each project?
Present Value of $1 Periods 1% 2% 3% Period 1 0.990 0.980 0.971 4% 5% 6% 8% 10% 12% 14% 16% 18% 0.962 0.952 0.943 0.926 0.893 0.877 0.862 0.847 0.743 0.718 0.909 Period 2 0.980 0.961 0.943 0.925 0.890 0.857 0.826 0.797 0.769 0.907 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 Period 3 0.971 0.942 0.915 Period 4 0.961 0.683 0.636 0.592 0.552 0.516 0.924 0.888 0.855 0.823 0.792 0.735 0.681 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.621 0.567 0.519 0.476 0.437 Period 6 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.942 0.888 0.837 0.790 0.933 0.871 0.813 0.760 Period 7 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 Period 8 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.923 0.853 0.789 0.731 0.914 0.837 Period 9 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.19 Period 11 0.350 0.287 0.237 0.195 0.162 Period 12 0.257 0.208 0.168 0.137 0.896 0.804 0.722 0.650 0.887 0.788 0.701 0.625 0.879 0.773 0.681 0.601 0.661 0.577 0.585 0.527 0.429 0.557 0.497 0.397 0.530 0.469 0.368 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.417 0.315 0.239 0.183 0.140 0.108 0.319 0.290 0.229 0.182 0.145 Period 13 0.116 Period 14 0.870 0.758 0.099 Period 15 0.861 0.743 0.642 0.555 0.481 0.084 Period 20 0.820 0.673 0.554 0.456 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.377 0.478 0.375 0.295 Period 25 0.780 0.610 0.233 0.146 0.092 0.059 0.038 0.024 0.016 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 An 0270 3453 0307 0.000 440 0.007 0.000 44 333 nnn.