1.

Carla Vista Manufacturing is considering the purchase of new computerized equipment. The machine costs $81600 and would generate $21120 in annual cost savings over its 5-year life. At the end of 5 years, the equipment would have a $4800 salvage value. Carla Vista's required rate of return is 16%.

Click here to view the factor table:

https://education.wiley.com/content/Davis_Managerial_Accounting_4e/media/simulations/pv_tables/Tables_App_9-1_9-2.pdf

Using the present value tables, the machine's net present value is nearest (round to the nearest dollar)

$-10162.

$69153.

$105600.

$-12447.

2.

Carol Garcia has just won the Lotto. Her prize pays $45600 at the end of each year for 6 years. In addition, she will receive a one-time payment of $273600 at the end of 6 years. Using the following factors at 12%, what amount has Carol really won in the Lotto? (round to the nearest dollar)

Type of Cash Flow Periods Interest Rate Factor

PV of $1 6 12% 0.5066

FV of $1 6 12% 1.9738

PV ordinary annuity 6 12% 4.1114

FV ordinary annuity 6 12% 8.1152

PV annuity due 6 12% 4.6048

$326086

$727512

$630037

$501600