1. Lyndon Company has been offered a contract to build a bridge for the state of Michigan. The contract would expire in ten years. The projected cash flows that result from the contract are given below: Cost of equipment $500,000 Working capital needed $100,000

Net annual cash inflows $80,000

Salvage value of equipment in ten years $40,000

Working capital released $100,000

The company's required rate of return and discount rate is 12%. The working capital would be released at the end of project. What is the present value of the salvage value of the equipment?

a. $12,880 b. $40,000 c. $100,000 d. $226,008

2.

Lyndon Company has been offered a contract to build a bridge for the state of Michigan. The contract would expire in ten years. The projected cash flows that result from the contract are given below:

Cost of equipment $500,000 Working capital needed $100,000 Net annual cash inflows $80,000 Salvage value of equipment in ten years $40,000

The company's required rate of return and discount rate is 12%. The working capital would be released at the end of project.

What is the present value of the annual cash inflows? a. $25,760 b. $80,000 c. $100,000 d. $452,016

3. Lyndon Company has been offered a contract to build a bridge for the state of Michigan. The contract would expire in ten years. The projected cash flows that result from the contract are given below: Cost of equipment $500,000 Working capital needed $100,000 Net annual cash inflows $80,000 Salvage value of equipment in ten years $40,000 The company's required rate of return and discount rate is 12%. The working capital would be released at the end of project. What is the present value of the working capital needed? a. $32,200 b. $(32,200) c. $100,000 d. $(100,000)

4.

Lyndon Company has been offered a contract to build a bridge for the state of Michigan/>/>. The contract would expire in ten years. The projected cash flows that result from the contract are given below:

Cost of equipment $500,000 Working capital needed $100,000 Net annual cash inflows $80,000 Salvage value of equipment in ten years $40,000 The company's required rate of return and discount rate is 12%. The working capital would be released at the end of project. What is the present value of the cost of the equipment? a. $446,450 b. $500,000 c. $(446,450) d. $(500,000)