Solution Manual for Principles of Corporate Finance 11th Edition

Brealey Myers Allen 0078034760 9780078034763

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Chapter 02 - How to Calculate Present Values

CHAPTER 2
How to Calculate Present Values

Answers to Problem Sets

1. If the discount factor is .507, then .507 x 1.126 = $1.

Est time: 01-05

2. DF x 139 = 125. Therefore, DF =125/139 = .899.

Est time: 01-05

3. PV = 374/(1.09)9 = 172.20.
Est time: 01-05

4. PV = 432/1.15 + 137/(1.152) + 797/(1.153) = 376 + 104 + 524 = $1,003.

Est time: 01-05

5. FV = 100 x 1.158 = $305.90.

Est time: 01-05

6. NPV = −1,548 + 138/.09 = −14.67 (cost today plus the present value of
the perpetuity).

Est time: 01-05

7. PV = 4/(.14 − .04) = $40.

Est time: 01-05

8. a.PV = 1/.10 = $10.

b. Since the perpetuity will be worth $10 in year 7, and since that is
roughly double the present value, the approximate PV equals $5.

You must take the present value of years 1–7 and subtract from the
total present value of the perpetuity:

PV = (1/.10)/(1.10)7 = 10/2= $5 (approximately).

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Chapter 02 - How to Calculate Present Values

c. A perpetuity paying $1 starting now would be worth $10, whereas a

perpetuity starting in year 8 would be worth roughly $5. The difference
between these cash flows is therefore approximately $5. PV = $10 – $5=
$5 (approximately).

d. PV = C/(r − g) = 10,000/(.10-.05) = $200,000.

Est time: 06-10

9. a.PV = 10,000/(1.055) = $7,835.26 (assuming the cost of the car does not
appreciate over those five years).

b. The six-year annuity factor [(1/0.08) – 1/(0.08 x (1+.08)6)] = 4.623. You

need to set aside (12,000 × six-year annuity factor) = 12,000 × 4.623 =
$55,475.

c. At the end of six years you would have 1.086 × (60,476 - 55,475)
= $7,935.

Est time: 06-10

10. a.FV = 1,000e.12 x 5 = 1,000e.6 = $1,822.12.

b. PV = 5e−.12 x 8 = 5e-.96 = $1.914 million.

c. PV = C (1/r – 1/rert) = 2,000(1/.12 – 1/.12e .12 x15) = $13,912.

Est time: 01-05
11.
a. FV = 10,000,000 x (1.06)4 = 12,624,770.

b. FV = 10,000,000 x (1 + .06/12)(4 x 12) = 12,704,892.

c. FV = 10,000,000 x e(4 x .06) = 12,712,492.

Est time: 01-05

12.
a. PV = $100/1.0110 = $90.53.
b. PV = $100/1.1310 = $29.46.
c. PV = $100/1.2515 = $3.52.

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Chapter 02 - How to Calculate Present Values

2 3
d. PV = $100/1.12 + $100/1.12 + $100/1.12 = $240.18.
Est time: 01-05

1
13. a.DF1 1 r1 0.905 r1 = 0.1050 = 10.50%.

1 1
b. DF2 (1 r )2 (1.105)2 0.819.
2

c. AF2 = DF1 + DF2 = 0.905 + 0.819 = 1.724.

d. PV of an annuity = C [annuity factor at r% for t years].

Here:
$24.65 = $10 [AF3]
AF3 = 2.465

e. AF3 = DF1 + DF2 + DF3 = AF2 +

DF3 2.465 = 1.724 + DF3
DF3 = 0.741

Est time: 06-10

14. The present value of the 10-year stream of cash inflows is:
1 1
PV $170,000 10
$886,739.66
0.14 0.14 (1.14)
Thus:
NPV = –$800,000 + $886,739.66 = +$86,739.66
At the end of five years, the factory’s value will be the present value of the
five remaining $170,000 cash flows:
1 1
PV $170,000 5 $583,623.76
0.14 0.14 (1.14)
Est time: 01-05

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Chapter 02 - How to Calculate Present Values

15.
10
Ct $50,000 $57,000 $75,000 $80,000 $85,000
NPV t $380,000 2 3 4 5
t 0 (1.12) 1.12 1.12 1.12 1.12 1.12

$92,000 $92,000 $80,000 $68,000 $50,000 $23,696.15

1.1261.1271.1281.1291.1210
Est time: 01-05

16. a.Let St = salary in year t.

30
40,000 (1.05)t 1
PV
t
t 1(1.08)
1 (1.05)30
40,000 30 $760,662.53
(.08 -.05) (.08 -.05) (1.08)

b. PV(salary) x 0.05 = $38,033.13

30
Future value = $38,033.13 x (1.08) = $382,714.30

c.
1 1
PV C t

r
r (1 r)
1 1
$382,714.30 C 20
0.08 0.08 (1.08)

1 1
C $382,714.30 $38,980.30
0.08 20
0.08 (1.08)

Est time: 06-10

17.
Period Present Value

0 400,000.00

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Chapter 02 - How to Calculate Present Values

1 +100,000/1.12 = +89,285.71
2
2 +200,000/1.12 = +159,438.78
3 +300,000/1.123 = +213,534.07
Total = NPV = $62,258.56

Est time: 01-05

18. We can break this down into several different cash flows, such that the sum of
these separate cash flows is the total cash flow. Then, the sum of the present
values of the separate cash flows is the present value of the entire project. (All
dollar figures are in millions.)
▪
Cost of the ship is $8 million
PV = $8 million
▪
Revenue is $5 million per year, and operating expenses are $4 million. Thus,
operating cash flow is $1 million per year for 15 years.
1 1
PV $1 million 15 $8.559 million.
0.08 0.08 (1.08)

▪
Major refits cost $2 million each and will occur at times t = 5 and t = 10.
PV = ( $2 million)/1.085 + ( $2 million)/1.0810 = $2.288 million.
▪
Sale for scrap brings in revenue of $1.5 million at t = 15.
PV = $1.5 million/1.0815 = $0.473 million.
Adding these present values gives the present value of the entire project:
NPV = $8 million + $8.559 million $2.288 million + $0.473 million
NPV = $1.256 million

Est time: 06-10

19. a.PV = $100,000.

b. PV = $180,000/1.125 = $102,136.83.
c. PV = $11,400/0.12 = $95,000.

1 1
d. PV $19,000 10 $107,354.24.
0.12 0.12 (1.12)

e. PV = $6,500/(0.12 0.05) = $92,857.14.

Prize (d) is the most valuable because it has the highest present value.

Est time: 01-05

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Chapter 02 - How to Calculate Present Values

20. Mr. Basset is buying a security worth $20,000 now, which is its present value.
The unknown is the annual payment. Using the present value of an annuity
formula, we have:
1 1
PV C t

r
r (1 r)
1 1
$20,000 C 12

0.08 0.08 (1.08)

1 1
C $20,000 $2,653.90
0.08 12
0.08 (1.08)
Est time: 01-05

21. Assume the Zhangs will put aside the same amount each year. One approach to
solving this problem is to find the present value of the cost of the boat and then
equate that to the present value of the money saved. From this equation, we can
solve for the amount to be put aside each year.
5
PV(boat) = $20,000/(1.10) = $12,418
1 1
PV(savings) = annual savings 5

0.10 0.10 (1.10)

Because PV(savings) must equal PV(boat):
1 1
Annual savings 5 $12,418
0.10 0.10 (1.10)

1 1
Annual savings $12,418 5
$3,276
0.10 0.10 (1.10)
Another approach is to use the future value of an annuity formula:
5
(1 .10) 1
Annual savings .10 $20,000

Annual savings = $ 3,276

Est time: 06-10

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Chapter 02 - How to Calculate Present Values

22. The fact that Kangaroo Autos is offering “free credit” tells us what the cash
payments are; it does not change the fact that money has time value. A 10%
annual rate of interest is equivalent to a monthly rate of 0.83%:
rmonthly = rannual /12 = 0.10/12 = 0.0083 = 0.83%
The present value of the payments to Kangaroo Autos is:
1 1
$1,000 $300 30 $8,938
0.0083 0. 0083 (1.0083)
A car from Turtle Motors costs $9,000 cash. Therefore, Kangaroo Autos
offers the better deal, i.e., the lower present value of cost.

Est time: 01-05

23. The NPVs are:

at 5% NPV$700,000 $30,000 $870,000 $117,687

1.05 (1.05)2
$30,000 870,000 $46,281
at 10% NPV$700,000
1.10 (1.10)2
$30,000 870,000 $16,068
at 15% NPV$700,000
1.15 (1.15)2
The figure below shows that the project has zero NPV at about 13.5%.

As a check, NPV at 13.5% is:

NPV$700,000 $30,000 870,000 $1.78

1.135 (1.135)2

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Chapter 02 - How to Calculate Present Values

Est time: 06-10

24. a.This is the usual perpetuity, and hence:

C $100
PV $1,428.57
r 0.07

b. This is worth the PV of stream (a) plus the immediate payment of $100:
PV = $100 + $1,428.57 = $1,528.57

c. The continuously compounded equivalent to a 7% annually compounded

rate is approximately 6.77%, because:
Ln(1.07) = 0.0677
or
e0.0677 = 1.0700
Thus:

PV C $100 $1,477.10
r 0.0677

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Chapter 02 - How to Calculate Present Values

Note that the pattern of payments in part (b) is more valuable than the
pattern of payments in part (c). It is preferable to receive cash flows at the
start of every year than to spread the receipt of cash evenly over the year;
with the former pattern of payment, you receive the cash more quickly.

Est time: 06-10

25. a.PV = $1 billion/0.08 = $12.5 billion.

b.PV = $1 billion/(0.08 – 0.04) = $25.0 billion.

1 1
c. PV $1 billion 20 $9.818 billion.
0.08 0.08 (1.08)

d. The continuously compounded equivalent to an 8% annually compounded

rate is approximately 7.7%, because:
Ln(1.08) = 0.0770
or
e0.0770 = 1.0800
Thus:
1 1
PV $1 billion (0.077)(20) $10.203 billion
0.077 0.077 e

This result is greater than the answer in Part (c) because the endowment
is now earning interest during the entire year.

Est time: 06-10

26. With annual compounding: FV = $100 (1.15)20 = $1,636.65.

With continuous compounding: FV = $100 e(0.15×20) = $2,008.55.

Est time: 01-05

27. One way to approach this problem is to solve for the present value of:
(1) $100 per year for 10 years, and
(2) $100 per year in perpetuity, with the first cash flow at year 11.
If this is a fair deal, these present values must be equal, and thus we can
solve for the interest rate (r).
The present value of $100 per year for 10 years is:

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Chapter 02 - How to Calculate Present Values

1 1
PV $100 10

r (r) (1 r)
The present value, as of year 10, of $100 per year forever, with the first payment
in year 11, is: PV10 = $100/r.
At t = 0, the present value of PV10 is:
1 $100
PV 10
(1 r) r
Equating these two expressions for present value, we have:
1 1 1 $100
$100 10 10
r
(r) (1 r) (1 r) r
Using trial and error or algebraic solution, we find that r = 7.18%.

Est time: 06-10

28. Assume the amount invested is one dollar.

Let A represent the investment at 12%, compounded annually.
Let B represent the investment at 11.7%, compounded semiannually.
Let C represent the investment at 11.5%, compounded continuously.
After one year:

FVA = $1 (1 + 0.12)1 = $1.1200

FVB = $1 (1 + 0.0585)2 = $1.1204

FVC = $1e(0.115 1) = $1.1219

After five years:

FVA = $1 (1 + 0.12)5 = $1.7623

10
FVB = $1 (1 + 0.0585) = $1.7657

FVC = $1e(0.115 5) = $1.7771

After twenty years:
20
FVA = $1 (1 + 0.12) = $9.6463
40
FVB = $1 (1 + 0.0585) = $9.7193
FVC = $1e(0.115 20) = $9.9742
The preferred investment is C.

Est time: 06-10

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Chapter 02 - How to Calculate Present Values

29. Because the cash flows occur every six months, we first need to calculate the
equivalent semiannual rate. Thus, 1.08 = (1 + r/2)2 => r = 7.846 semiannually
compounded APR. Therefore the rate for six months is 7.846/2, or 3.923%:
1 1
PV $100,000 $100,000 9 $846,147
0.03923 0.03923 (1.03923)

Est time: 06-10

30. a.Each installment is: $9,420,713/19 = $495,827.

1 1
PV $495,827 19 $4,761,724
0.08 0.08 (1.08)

b. If ERC is willing to pay $4.2 million, then:

1 1
$4,200,000 $495,827
r
19

r (1 r)
Using Excel or a financial calculator, we find that r = 9.81%.

Est time: 06-10

1 1
31. a. PV $70,000 8 $402,264.73

0.08 0.08 (1.08)

b.
Beginning- Year-End Total
Year of-Year Interest on Year-End Amortization End-of-Year
of Loan ($) Balance ($)
Balance ($) Balance ($) Payment ($)
1 402,264.73 32,181.18 70,000.00 37,818.82 364,445.91
2 364,445.91 29,155.67 70,000.00 40,844.33 323,601.58
3 323,601.58 25,888.13 70,000.00 44,111.87 279,489.71
4 279,489.71 22,359.18 70,000.00 47,640.82 231,848.88
5 231,848.88 18,547.91 70,000.00 51,452.09 180,396.79
6 180,396.79 14,431.74 70,000.00 55,568.26 124,828.54
7 124,828.54 9,986.28 70,000.00 60,013.72 64,814.82
8 64,814.82 5,185.19 70,000.00 64,814.81 0.01

Est time: 06-10

32. This is an annuity problem with the present value of the annuity equal to
$2 million (as of your retirement date), and the interest rate equal to 8%

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Chapter 02 - How to Calculate Present Values

with 15 time periods. Thus, your annual level of expenditure (C) is

determined as follows:
1 1
PV C t

r
r (1 r)
1 1
$2,000,000 C 15
0.08 0.08 (1.08)

1 1
C $2,000,000 $233,659
0.08 15
0.08 (1.08)
With an inflation rate of 4% per year, we will still accumulate $2 million as of
our retirement date. However, because we want to spend a constant amount
per year in real terms (R, constant for all t), the nominal amount (Ct) must
increase each year. For each year t: R = Ct /(1 + inflation rate)t
Therefore:
PV [all Ct ] = PV [all R (1 + inflation rate)t] = $2,000,000
(1 0.04)1 (1 0.04)2 (1 0.04)15
R 1 2. . . 15 $2,000,000
(1 0.08) (1 0.08) (1 0.08)

R [0.9630 + 0.9273 + . . . + 0.5677] = $2,000,000

R 11.2390 = $2,000,000
R = $177,952
(1 0.08) 1 .03846. Then, redoing
Alternatively, consider that the real rate is
(1 0.04)
the steps above using the real rate gives a real cash flow equal to:

C $2,000,000 1 1 $177,952
0.03846 15
0.03846 (1.03846)

Thus C1 = ($177,952 1.04) = $185,070, C2 = $192,473, etc.

Est time: 11-15

1 1
33.a. PV $50,000 12 $430,925.89
0.055 0.055 (1.055)

b. The annually compounded rate is 5.5%, so the semiannual rate is:

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Chapter 02 - How to Calculate Present Values

(1.055)(1/2) – 1 = 0.0271 = 2.71%

Since the payments now arrive six months earlier than previously:
PV = $430,925.89 × 1.0271 = $442,603.98

Est time: 06-10

34. In three years, the balance in the mutual fund will be:
FV = $1,000,000 × (1.035)3 = $1,108,718
The monthly shortfall will be: $15,000 – ($7,500 + $1,500) = $6,000.
Annual withdrawals from the mutual fund will be: $6,000 × 12 = $72,000.
Assume the first annual withdrawal occurs three years from today, when the
balance in the mutual fund will be $1,108,718. Treating the withdrawals as an
annuity due, we solve for t as follows:
1 1
PV C t (1 r)
r
r (1 r)

$1,108,718 $72,000 1 1 t 1.035

0.035 0.035 (1.035)

Using Excel or a financial calculator, we find that t = 21.38 years.

Est time: 06-10

35. a. PV = 2/.12 = $16.667 million.

1 1
b. PV = $2 20 $14.939 million.

0.12 0.12 (1.12)

c. PV = 2/(.12-.03) = $22.222 million

1 1.0320
d. PV = $2 20 $18.061million.
(0.12 -.03) (0.12 -.03) (1.12)

Est time: 06-10

36. a. First we must determine the 20-year annuity factor at a 6% interest rate.
20-year annuity factor = [1/.06 – 1/.06(1.06)20) = 11.4699.

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Chapter 02 - How to Calculate Present Values

Once we have the annuity factor, we can determine the

mortgage payment.
Mortgage payment = $200,000/11.4699 = $17,436.91.
b.
Total Year-
Beginning Balance Year-End End Payment Amortization End-of-Year
Year ($) Interest ($) ($) of Loan ($) Balance ($)
1 200,000.00 12,000.00 17,436.91 5,436.91 194,563.09
2 194,563.09 11,673.79 17,436.91 5,763.13 188,799.96
3 188,799.96 11,328.00 17,436.91 6,108.91 182,691.05
4 182,691.05 10,961.46 17,436.91 6,475.45 176,215.60
5 176,215.60 10,572.94 17,436.91 6,863.98 169,351.63
6 169,351.63 10,161.10 17,436.91 7,275.81 162,075.81
7 162,075.81 9,724.55 17,436.91 7,712.36 154,363.45
8 154,363.45 9,261.81 17,436.91 8,175.10 146,188.34
9 146,188.34 8,771.30 17,436.91 8,665.61 137,522.73
10 137,522.73 8,251.36 17,436.91 9,185.55 128,337.19
11 128,337.19 7,700.23 17,436.91 9,736.68 118,600.51
12 118,600.51 7,116.03 17,436.91 10,320.88 108,279.62
13 108,279.62 6,496.78 17,436.91 10,940.13 97,339.49
14 97,339.49 5,840.37 17,436.91 11,596.54 85,742.95
15 85,742.95 5,144.58 17,436.91 12,292.33 73,450.61
16 73,450.61 4,407.04 17,436.91 13,029.87 60,420.74
17 60,420.74 3,625.24 17,436.91 13,811.67 46,609.07
18 46,609.07 2,796.54 17,436.91 14,640.37 31,968.71
19 31,968.71 1,918.12 17,436.91 15,518.79 16,449.92
20 16,449.92 986.99 17,436.91 16,449.92 0.00

c. Nearly 69% of the initial loan payment goes toward interest

($12,000/$17,436.79 = .6882). Of the last payment, only 6% goes
toward interest (987.24/17,436.79 = .06).
After 10 years, $71,661.21 has been paid off ($200,000 – remaining
balance of $128,338.79). This represents only 36% of the loan. The
reason that less than half of the loan has paid off during half of its life
is due to compound interest.
Est time: 11-15

37. a.Using the Rule of 72, the time for money to double at 12% is 72/12, or six
years. More precisely, if x is the number of years for money to
double, then:
(1.12)x = 2

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points into the second piece, and, holding the parts firmly with the
left hand, drive the nails into place.
68. Nailset.—Except in rough work, the nail should not be driven
entirely in with the hammer or the wood will be marred.
A nailset held as in Fig. 129 should be used to set the head of the
nail slightly below the surface of the wood—about one thirty-second
of an inch. A finger placed against the side of the nailset and allowed
to rest on the piece of wood aids greatly in guiding the set, which
otherwise might jump off the nail head when the blow is struck and
indent the wood.

Fig. 129. Fig. 130.

69. Withdrawing Nails.—Should it be necessary to withdraw a

nail, place a block of wood under the head
of the hammer, Fig. 130, to prevent marring the surface of the wood.
If the nail is a long one, the size of the block used should be
increased as the nail comes out, that the nail may not be bent.
70. The Screwdriver.—Patent ratchet and spiral screwdrivers
have come into quite common use among
workers in wood. The old style, Fig. 131, however, is much better
suited to elementary work than any of these special forms.

Fig. 131.

71. Screws.—Screws, like nails, are made entirely by machinery.

They are packed in pasteboard boxes and sold by the
gross. The size of a screw is designated by the length in inches and
the size of the wire from which it is made; thus, 1 inch No. 10 flat-
head bright screw.
The gage of wire for nails and the gage of wire for screws should
not be confused. Fig. 132 is a full-sized illustration of the gage used
for determining the size of wire for nails. The numbers apply to the
openings at the edge, not to the circular parts. The notch at No. 1 will
just slip over No. 1 wire. Fig. 135 is a full-sized illustration of a wire
gage for screws. The gage is slipped over the screw just below the
head.
 Fig. 132.

Flathead screws are used for ordinary work. Roundhead screws

are used because they are more ornamental. Fig. 133. Either kind
may be made of steel or brass. Steel screws are often blued by
treating them with heat or an acid.
 Fig. 133. Fig. 134.

72. Fastening with Screws.—Where two pieces of hard wood are

to be fastened with screws, a hole
just large enough to take in the shank of the screw must be bored in
the upper part. In the lower part, a hole should be bored just large
enough to take in the core of the screw snugly. Fig. 134. For flathead
screws, the hole should be countersunk so that the head may be
flush or sunk slightly below the surface of the wood. In soft woods,
the boring of a hole in the lower piece may be omitted.
 Fig. 135.

73. Glue.—Nails are but seldom used in cabinet work to fasten

parts together; glue being used instead. Glue is
manufactured from the refuse parts of animals. Strippings of hide,
bone, horn, hoofs, etc., are boiled to a jelly; chemicals are added to
give it the light color. It is usually placed on the market in the form of
dry chips.
Glue pots are made double, the glue being placed in one part and
this placed in a larger one which contains water.

Fig. 136.

The glue is heated by the hot water and steam of the outer kettle.
Fig. 136.
To prepare glue, dissolve the dry chips in water. It is well to soak
them over night unless quite thin. If the glue chips are thin they may
be barely covered with water and the pot set in the outer kettle of
boiling water. Some kinds of glue require less water. The glue should
be stirred occasionally. It should be used while hot and should be
made thin enough to flow easily when applied with a brush. If the
wood is cold it will chill the glue. Best results are obtained by
warming the wood in an oven.
Prepared liquid glues, to be applied without heating, are common.
As these glues thicken with age, due to evaporation, they must be
thinned occasionally. In cold weather they chill and must be warmed
in hot water to bring them to a proper consistency.
 Fig. 137.

74. Clamps.—Clamps are used in the making of a glue joint to

expel the glue from the surfaces of contact, forcing it
up into the pores of the wood or, if too much has been applied, out
on the sides of the joint. For holding small parts, the wooden hand-
screw is used, Fig. 137. To adjust this clamp, hold the handle of the
shoulder spindle firmly in the left hand and the handle of the end
spindle in the right hand; revolve them about an axis midway
between and parallel to the spindles until the approximate opening of
the jaw is obtained, Fig. 138. Place the clamp on the parts and screw
the shoulder spindle up tight, adjusting the end spindle when
necessary so that when it is tightened the jaws of the clamp shall be
parallel, Fig. 139. In taking off this clamp, the end spindle is the one
which must be released.

Fig. 138. Fig. 139.

Fig. 140 illustrates three kinds of bar clamps such as are used for
clamping wide frames and boards.
 Fig. 140.

Fig. 141 illustrates a simple form of clamp which can be made by

the student himself. Two wedges to each clamp, driven in with the
hammer, supply the necessary pressure. Whenever finished
surfaces are to be clamped, blocks of wood must be placed between
them and the clamp jaws to prevent their being marred.
 Fig. 141.

75. Gluing.—Where the end grain is to form part of a glue joint, it

is necessary to apply a glue size first.
This is done by filling the open grain of the end with a preliminary
coating of thin, hot glue.
Rubbed glue joints require no clamps. The edges are jointed
perfectly straight, glue is applied to each and they are then rubbed
together with as great pressure as is possible to expel the glue.
When this is properly done the pieces will hold together and may be
set away to dry. Fig. 142.
Fig. 142.
 PART II.
SIMPLE JOINERY.

Chapter VIII.
Type Forms.

76. Joinery.—This term in its broader meaning refers to the art of

framing the finishing work of a house, such as doors
and windows; and to the construction of permanent fittings, such as
mantels, cupboards, linen presses, etc. Joinery as used herein refers
merely to the putting together of two or more parts, called the
members.
77. General Directions for Joinery:—Take into consideration the
direction of the grain in
planning the relative positions of the members. Make due allowance
where shrinkage is likely to be considerable.
As far as possible, plan to have the members join face to face.
Face sides are more likely to be true than are the other two surfaces
and therefore the joints are more likely to fit properly.
Make all measurements from a common starting point, as far as
practicable. Remember to keep the head of the gage, and the beam
of the trysquare against one or the other of the faces, unless there
should be special reasons for doing otherwise.
In practice it is sometimes advisable to locate the sides of a joint
by superposition rather than by measurement. Laying out by
superposition consists in placing one member upon another and
marking upon the second member the width, thickness or length of
the first. Fig. 143. Usually, it is found possible to locate and square
with knife and trysquare a line to represent one of the sides of the
joint. The first member is then held so that one of its arrises rests
upon this line, and a point is made with knife at the other arris. The
superimposed piece is then removed and a line made with knife and
try-square—not thru the mark of the knife point but inside, just
touching it.

Fig. 143. Fig. 144.

Where several members or parts are to be laid out, cut and fitted,
it is of the utmost importance that the work be done systematically.
System and power to visualize—that is, to see things in their proper
relation to one another in the finished piece—make it possible for
men to lay out and cut the members to the most intricate frames of
buildings before a single part has been put together. Lay out
duplicate parts and duplicate joints as suggested in Chapter VII,
Section 62. Where several joints of a similar size and kind are to be
fitted, mark the different parts to each joint with the same number or
letter as soon as fitted that no other member may be fitted to either
of these. Fig. 144. On small pieces, such as the stool, it is possible
to aid in visualizing by setting up the posts in the positions they are
to occupy relative to one another, marking roughly, as with a
penciled circle, the approximate location of the mortises, auger
holes, etc. The members may then be laid on the bench and
accurately marked without danger of misplacing the openings.
While the knife is used almost exclusively in laying out joints, there
are a few instances in which a pencil, if well sharpened and used
with slight pressure is preferable. To illustrate, suppose it is desired
to locate the ends of the mortises in the posts. Fig. 144. To knife
entirely across the surfaces of the four pieces and around the sides
of each as would be necessary to locate the ends of the mortises,
would injure the surfaces. Instead, pencil these lines and gage
between the pencil lines. Those parts of the pencil lines enclosed by
the gage lines—the ends of the mortises—may then be knifed, if
desired, to assist in placing the chisel for the final cut.
In sawing joints in hard wood, the saw should be made to cut
accurately to the line, Chapter II, Section 14. When working soft
wood, beginners are often permitted to leave a small margin—about
one thirty-second of an inch—between the knife and the saw kerf.
This margin is afterwards pared away with the chisel.

Fig. 145. Fig. 146.

78. Dado.—A dado, Fig. 145, is made by cutting a rectangular

groove entirely across one member into which the end
of another member fits. Dadoes are cut across the grain of the wood;
when similar openings are cut parallel to the grain, they are called
simply, grooves. Dadoes are used in the making of shelving, window
and door frames, etc.
79. Directions for Dado.—(1) Locate by means of the rule one
side of the dado and mark its position
with the point of the knife. (2) At this point, square a sharp line
across the piece with knife and trysquare. (3) By superposition,
locate and mark the second side. (4) Square these lines across the
edges of the piece a distance equal to the approximate depth of the
dado. (5) Set the gage for the required depth and gage between the
knife lines on the two edges. (6) Saw just far enough inside the knife
lines that the sides of the dado may be finished to the lines with the
chisel. Chapter II, Section 14. Saw down just to the gage lines,
watching both edges that the kerfs be not made too deep. (7) Chisel
out the waste until the bottom of the dado is smooth and true.
Chapter V, Section 47. Test the bottom as shown in Fig. 146. Two
brads are driven into a block having a straight edge until they project
a distance equal to the proposed depth of the dado. (8) Pare the
sides of the dado to the knife lines. Chapter V, Section 48. These
sides might be finished in another way, by setting a wide chisel in the
knife line and tapping it gently with a mallet. If care is taken the
successive settings of the chisel need not show.
Where the dado is to be cut on a piece narrow enough that the
saw may be made to follow the line accurately, it is considered better
practice to saw accurately to the line. Chapter II, Section 14.
80. Cross-Lap Joint.—Usually, stock for the two members of the
cross-lap joint can be best planed to width
and thickness in one piece. Place two sets of face marks on the
piece, so that there shall be one set of marks on each member after
they are separated. Two methods of making this joint are given. The
first is safer for beginners; the second, because the members cannot
be tried until the joints are completed, is an excellent test of one’s
ability. Fig. 147.
 Fig. 147.

81. Directions for Cross-Lap Joint.—First Method: (1) Square

the two ends, measure from
each of these the desired length of each member, square knife lines
around, saw apart, finishing the ends square to the lines. (2)
Measure from one end of each member the required distance to the
nearer edge of the joint. Since the corresponding faces of the two
members must be on the same side of the piece when the parts are
put together, it will be necessary to lay off the groove of one member
on the face and of the other member on the side opposite the face. If
the joints are to be in the middle of each member but one
measurement need be made. Chapter VII, Section 62. (3) Square
sharp knife lines across at these points. (4) By superposition, locate
and knife the second edge of each joint. (5) If the joints are to be in
the middle of each member, before proceeding further, test to see
that the lines have been laid out properly. If the members are placed
side by side and the ends evened as in laying out in (2) above, the
lines will of necessity correspond. Turn one of the members end for
end and even the two ends; the lines ought still to correspond. If they
do not, points marked midway between the corresponding lines will
give the correct position for the new lines, Fig. 148. (6) Extend the
knife lines just made across the two adjoining surfaces of each
member. (7) Set the gage for the required depth and gage between
the knife lines on these surfaces. Tho the groove on one member is
laid out on the side opposite the face, do not make the mistake of
holding the head of the gage against other than the face. (8) Saw
accurately, Chapter II, Section 14, to the knife lines and to a depth
indicated by the gage lines. (9) Chisel out the waste stock. Chapter
V, Section 47. (10) Test as shown in Fig. 149. A well made cross-lap
joint is one in which the members can be put together with the
pressure of the hands and which will not fall apart of their own
weight. Fig. 150 shows the results of “forcing a fit.”

Fig. 148.

Fig. 149. Fig. 150.

82. Directions for Cross-Lap Joint.

—Second Method. The two members are to be planed to width and
thickness in one piece but are not to be separated until the grooves
have been laid out and cut. The grooves must be laid out by
measurement only, since superposition is impossible. The positions
of the grooves relative to the faces are, as in the first method, one on
the face and one on the side opposite. The gaging for both is done
from the faces.
83. Glue Joint.—Frequently it becomes necessary to glue
together a number of boards to make one wide
enough to meet the requirements of the work in hand. A table top is
a good illustration. A properly glued butt joint ought to be stronger
than the natural wood.
When the wood is of sufficient thickness, the joint may be
reinforced by means of dowels. The jointer should be used for
planing the edges. It is extremely difficult to prepare edges for glue
joints with the shorter planes. The jack plane should be used to
rough off the edges and prepare them for the jointer.

Fig. 151.

84. Directions for Glue Joint.—(1) If the boards are in the rough,
plane one surface of each true and
out of wind. (2) Pencil the face marks upon these surfaces and
indicate in some way the direction of the surface grain as well. Later,
it will be necessary to plane both pieces at once in surfacing over the
joints, and unless the parts are fitted with proper regard to the grain,
it will be impossible to plane one without roughing up the other. Then
too, the faces should be so selected that the warpage of one shall
counteract the warpage of the other. Fig. 151 shows the manner of
placing the pieces. Observe the rings of growth. Chapter 12. (3) Joint
one edge of each piece straight and square. The final plane strokes
must be taken the full length of the board and the plane-iron must be
set very shallow. Since the shrinkage is more at the ends than in the
middle, sometimes the middles of long boards are planed just a
shaving or two lower than the ends. (4) Place one of the boards in
the vise, jointed edge up, and place the other board in position on it.
Four tests are commonly used: First, placing the eye on a level with
the joint and looking toward the light, Fig. 152; second, tapping the
under board lightly to see if the top board “rocks”; third, sliding the
top board lengthwise slowly to “feel” for suction; fourth, holding a
straightedge as shown in Fig. 153 to see that the faces lie in the
same plane. (5) Glue the edges, Fig. 154. Work rapidly but carefully.
(6) Place the parts in the clamps and set away to dry; ten hours is
usually long enough. Keep the faces as even as possible in applying
the clamps. (7) When the glue has hardened the clamps may be
removed, the surplus glue scraped off and the parts treated as one
piece in squaring it up.

Fig. 152. Fig. 153.

 Fig. 154.

85. Doweling.—Dowels are small wooden pins used in joining

parts together. Dowels can be bought ready made
in a variety of sizes. If desired short dowels may be made as follows:
(1) Select straight-grained strong wood—beech, birch or oak; waste
wood can usually be found that will do. (2) Split, not saw, these
pieces roughly to square prisms. The blocks from which they are to
be split should not be over eight or ten inches long to work well. (3)
Plane off the irregularities, roughly rounding the pieces to size. (4)
Point the ends slightly and drive the pieces thru a dowel plate. Fig.
155. The pegs should be driven thru the larger hole first. The holes
of the dowel plate are larger in diameter on one side of the plate than
on the other to give clearance to the peg as it is driven thru.