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

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. $\begin{array}{lrr}&\text { Golf Course } & \text { Clubhouse } \\&\text { Ungrade } & \text { Ungrade }\\\text { Initial investment } & \$ 500,000 & \$ 100,000 \\\text { Annual cash flows } & \$ 88,500 & \$ 34,320 \\\text { Life of the project } & 10 \text { years } & 4 \text { years } \\\text { Depreciation per year } & \$ 50,000 & \$ 25,000\end{array}$ Waterfall requires a minimum rate of return of 8%. 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.