Norton Manufacturing is considering the following two investment proposals: \[\begin{array} { | l | r | r | } \hline & \text { Proposal X } & \text { Proposal } \mathbf { Y } \\ \hline \text { Investment } & \$ 732,000 & \$ 500,000 \\ \hline \text { Useful life } & 5 \text { years } & 4 \text { years } \\ \hline \text { Estimated annual net cash inflows received } & & \\ \text { at the end of each year } & \$ 152,000 & \$ 108,000 \\ \hline \text { Residual value } & \$ 60,000 & \$ 0 \\ \hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\ \hline \text { Annual discount rate } & 10 \% & 9 \% \\ \hline \end{array}\] Compute the present value of the future cash inflows from Proposal Y. Present value of an ordinary annuity of $1: \[\begin{array} { | l | r | r | r | } \hline & { 8 \% } &{ 9 \% } & 10 \% \\ \hline 1 & 0.926 & 0.917 & 0.909 \\ \hline 2 & 1.783 & 1.759 & 1.736 \\ \hline 3 & 2.577 & 2.531 & 2.487 \\ \hline 4 & 3.312 & 3.240 & 3.170 \\ \hline 5 & 3.993 & 3.809 & 3.791 \\ \hline 6 & 4.623 & 4.486 & 4.355 \\ \hline \end{array}\]

A) $266,750 B) $349,920 C) $290,000 D) $250,000 A) $266,750 B) $349,920 C) $290,000 D) $250,000

Ken Jones has just won the state lottery.The state offers the following three payout options for after-tax prize money: 1.$50,000 per year at the end of each of the next six years 2.$300,000 (lump sum)now 3.$400,000 (lump sum)six years from now Calculate the present value of each scenario using an 8% annual discount rate.Round to nearest whole dollar. Present value of an ordinary annuity of $1: \[\begin{array} { | c | r | r | r | } \hline & { 7 \% } & { 8 \% } &{ 9 \% } \\ \hline 1 & 0.935 & 0.926 & 0.917 \\ \hline 2 & 1.808 & 1.783 & 1.759 \\ \hline 3 & 2.624 & 2.577 & 2.531 \\ \hline 4 & 3.387 & 3.312 & 3.240 \\ \hline 5 & 4.100 & 3.993 & 3.890 \\ \hline 6 & 4.767 & 4.623 & 4.486 \\ \hline \end{array}\] Present value of $1: \[\begin{array} { | c | r | r | r | } \hline & { 7 \% } & { 8 \% } & { 9 \% } \\ \hline 1 & 0.935 & 0.926 & 0.917 \\ \hline 2 & 0.873 & 0.857 & 0.842 \\ \hline 3 & 0.816 & 0.794 & 0.772 \\ \hline 4 & 0.763 & 0.735 & 0.708 \\ \hline 5 & 0.713 & 0.681 & 0.650 \\ \hline 6 & 0.666 & 0.630 & 0.596 \\ \hline \end{array}\]

Scenario 1: Present value of lottery pay

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