1. ) Poe Company is considering the purchase of new equipment costing $90,000. The projected net cash flows are $45,000 for the first two years and $40,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine.

Periods	Present Value of $1 at 10%			Present Value of an Annuity of $1 at 10%
1		0.9091			0.9091
2		0.8264			1.7355
3		0.7513			2.4869
4		0.6830			3.1699

A) $(37,430).

B) $(23,007).

C) $37,430.

D) $23,007.

E) $45,474.

2.) Indicate several reasons why companies prepare budgets for their profit centers and cost centers, and explain what role supervisors and middle managers should play in the budgeting process.