1. A company is considering the purchase of new equipment costing $91,000. The machine has a useful life of four years and no salvage value. The company requires a 12% return on its investments. The factors for the present value of an annuity of 1 for different periods follow:

Assuming all revenue is to be received at the end of each year, what are the net cash flows for this investment if net present value equals ($11,790)?

A. $78,210 B. $10,920 C. $25,750 D. $237,547 E. $33,513

2. Scott Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from the equipment is $1,200, after deducting $10,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of three years and a $4,000 salvage value. Scott requires a 12% return on its investments. The factors for the present value of $1 for different periods follow:

What is the net present value of the machine and what is the maximum Scott would have been willing to pay for it?

		$(251.52) but Scott would not pay any amount to acquire the machine because the NPV is negative.
		$(251.52) and Scott would be willing to pay $29,748.48 for the machine.
		$(251.52) but the price Scott would pay cannot be determined.
		$900 and Scott would be willing to pay $30,900 to acquire the machine.
		$900 but Scott would not be willing to acquire the machine. 3. The net present value capital budgeting method considers all estimated cash flows for the project's expected life. True or False? Pease explain every answer