1. ABC purchased some equipment five years ago for $697,400. These assets are classified as five-year property for MACRS. The company is currently replacing this equipment, so the old equipment is being sold for $85,000. What is the after-tax salvage value from this sale if the tax rate is 25 percent?

2. ABC Inc. has 5 years of remaining life. If kept, the machine will have depreciation expenses of $700 each year. If the current book value is $3,500, and it can be sold for $4,500 at this time. If the old machine is not replaced, it can be sold for $800 at the end of its useful life. ABC is considering purchasing a new machine, which costs $13,200 and has an estimated useful life of 5 years with an estimated market value of $2,500. This machine will be depreciated straight-line to $1,200 book value over the life of the project. The new machine would raise sales by $3,000 per year; the new machine would also increase operating expenses by $500 per year. To support the greater sales, the new machine would require $2,100 additional NWC. ABC's tax rate is 24% and its WACC is 9%. What is the NPV of the replacement project?

3. Kelly's Corner Bakery purchased a lot in Oil City six years ago at a cost of $128,000. Today, that lot has a market value of $128,800. At the time of the purchase, the company spent $6,500 to level the lot and another $12,400 to install storm drains. The company now wants to build a new facility on the site at an estimated cost of $494,700. What amount should be used as the initial cash flow for this project?

4. ABC. is considering a new five-year expansion project that requires an initial fixed asset investment of $7 million. The equipment is a five-year property for MACRS, it will be worthless at the end of the project life. The project is estimated to generate $4,389,000 in annual sales, with costs of $1,731,200. The tax rate is 24 percent. What is the Year 4 operating cash flow for this project?