ng- Spring 2018 Quiz: Quiz - Chapter 26 This Question: 1 pt Candela Cable Compan
ID: 2413007 • Letter: N
Question
ng- Spring 2018 Quiz: Quiz - Chapter 26 This Question: 1 pt Candela Cable Company is considering investing $450.000 in telecommunications equipment that has an estimated life of five years with no residual value. The cash fows are as shown below Year 1 $120,000 2 235.000 140,000 98,000 The present value of $1 10% 11% 12% 13% 14% 1 0.9090.901 0893 0.885 0.877 2 08260.812 0.7970.7830.769 3 0.7510.731 0.712 0693 0 675 4 0683 659 06360.613 0.52 OA, between 12% and 13 OB, between 9% and 10% OC, more than 13% 0 D, less than 10%Explanation / Answer
At 10%
Year
CF
Pv at 10%
Present value
1
120000
0.909
109080
2
235000
0.826
194110
3
140000
0.751
105140
4
98000
0.683
66934
475264
At 11%
Year
CF
Pv at 11%
Present value
1
120000
0.901
108120
2
235000
0.812
190820
3
140000
0.731
102340
4
98000
0.659
64582
465862
At 12%
Year
CF
Pv at 12%
Present value
1
120000
0.893
107160
2
235000
0.797
187295
3
140000
0.712
99680
4
98000
0.636
62328
456463
At 13%
Year
CF
Pv at 13%
Present value
1
120000
0.885
106200
2
235000
0.783
184005
3
140000
0.693
97020
4
98000
0.613
60074
447299
Ans A between 12% and 13%
At 10%
Year
CF
Pv at 10%
Present value
1
120000
0.909
109080
2
235000
0.826
194110
3
140000
0.751
105140
4
98000
0.683
66934
475264
At 11%
Year
CF
Pv at 11%
Present value
1
120000
0.901
108120
2
235000
0.812
190820
3
140000
0.731
102340
4
98000
0.659
64582
465862
At 12%
Year
CF
Pv at 12%
Present value
1
120000
0.893
107160
2
235000
0.797
187295
3
140000
0.712
99680
4
98000
0.636
62328
456463
At 13%
Year
CF
Pv at 13%
Present value
1
120000
0.885
106200
2
235000
0.783
184005
3
140000
0.693
97020
4
98000
0.613
60074
447299
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