AcctCh10HW.xlsx - Payback Investment After tax Benefit...

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10% Present Value Ordinary Annuity Factor8.513611% Present Value Ordinary Annuity Factor7.9633PVAF factor of 8.1234 correlates to what %8.5136- 8.1234x0.39020.70918.5136-7.963310.5503IRR = 10.71%
Outlays75,000After tax Cash flows15,000 7 yearsReturn0.2Capital Cost0.1PVB = Present Value of Benefits Annuity = Annual cash flow from investmentPVAF = Present value of annuity factora.b.c.d.PVB = $15,000 (4.8684) =$73,026PVC =$75,000NPV = ($1,974)IRR = 9%
Cost of Capital 8%Freezer APresent ValueFreezer BPresent ValueInvestment Required$ 29,000.00 $ (29,000.00) $ 25,000.00 $ (25,000.00) PVFAnnual Electric Bill$ 3,000.00 ($21,416.89)$ 4,000.00 ($28,555.86)PVAFSalvage Value$ 6,000.00 $ 2,573.40 $ 5,000.00 $ 2,144.50 Life 11$ (47,843.49)11 $ (51,411.36)Freezer A has the lowest total costs

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