1. 1.

2. ABCCo.hasaninventoryconversionperiodof75days,receivablescollectionperiodof30days,andpayablesdeferralperiodof30days.Annualsalesare$4,562,500.COGSis$2,920,000.

   Whatisthebestsuggestiontohelpthemturnoverinventoryfaster.

   Hireataxconsultant

   Makesureinvoicesaresentinatimelymanner

   Insteadoforderingmaterialsoncepermonthordertwicepermonth.

   Sellmore

2.

XYZCo.isevaluatingthepurchaseofanewmachinethatis$200,000installedwithnoNWCchange.Theyplantosellthemachineattheendof3yearsfor$20,000.MACRS3year.Withthemoreefficientmachine,laborsavingsperyearareexpectedtobe$70,000,$90,000,$80,000respectively.40%tax.

Whatistheinitialinvestment?

190,000

200,000

220,000

180,000

3.

1. XYZ Co.is evaluating the purchase of a new machine that is$200,000installedwith no NWC change. They plan to sell the machineat the end of 3 years for $20,000. MACRS 3 year. With the more efficient machine, labor savings per year are expected to be $70,000, $90,000, $80,000 respectively. 40% tax.

   What is the project net cash flow (OCF) for year 2?

   88,900

   90,000

   660

   89,560

4.

1. XYZ Co.is evaluating the purchase of a new machine that is$200,000installedwith no NWC change. They plan to sell the machineat the end of 3 years for $20,000. MACRS 3 year. With the more efficient machine, labor savings per year are expected to be $70,000, $90,000, $80,000 respectively. 40% tax.

   What is the terminal cash flow?

   20,000

   5,180

   17,928

   16,400