1) IQ Electronics, which assembles printed circuit boards, is considering the purchase of a new IC chip placement machine. It has a first cost of $300,000 and is expected to save them $125,000 per year in labour and operating costs compared with the system they have now. The life of the system is expected to be four years. The salvage value of the machine is expected to be $100,000. IQ's tax rate is 40%, and the equipment CCA rate is Class 8 (20% declining balance) with only half of the CCA eligible in year 1. What is the net present worth, given a MARR of 15%? Should IQ proceed with this purchase?Answer: NPW=$26,078

2) A Nova Scotia environmental company is considering the purchase of a water testing machine that will test drinking water samples for contaminants. The machine will cost the company $120,000 with a CCA rate of 30%. Annual operating and maintenance costs are $2,000 escalating at 2% for the life of the machine which is expected to be 5 years, at which time it will be sold for parts for $7,500; the tax rate is 25%. a) If the company expects to initially test 200 samples per year, how much should they charge for each sample tested if they want a 10% return on their investment? Answer: $175.74/sample b) If instead, the company expects to initially test 200 samples per year that will increase by 5% per year for the life of the project, how much should they charge for each sample tested if they want a 10% return on their investment? Answer: $160.55/sample