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Assume that a company is considering buying a new piece of equipment for $250,000 that would have a useful life of five years and a salvage value of $25,000. The equipment would generate the following estimated annual revenues and expenses: $ 120,000 Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $ 15,000 5,000 45,000 30,000 95,000 $ 25,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 14%, what is the net present value of this investment? Assume that a company purchased a new machine for $24,000 that has no salvage value. The machine is expected to save the company $6,000 a year in cash operating costs for seven years. The company also expects the machine to provide annual intangible benefits that are difficult to quantify. Assuming the company's hurdle rate is 23%, the minimum value of the intangible benefits that would be required to make this investment acceptable is closest to: Assume that a company has provided the following information regarding a capital investment opportunity: Initial investment in equipment Initial investment in working capital Estimated annual sales Estimated annual cash operating expenses Repairs and maintenance in 3 years $ 150,000 $ 30,000 $ 160,000 $ 70,000 $ 20,000 The equipment has a four-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 20%, the present value of all relevant cash flows from Year 2 is closest toStep by Step Solution
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