1) Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment of $3.942 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate $3,504,000 in annual sales, with costs of $1,401,600. If the tax rate is 23 percent, what is the OCF for this project?

• $1,937,789

• $1,753,237

• $1,845,513

• $860,013

• $2,102,400

2)

Dog Up! Franks is looking at a new sausage system with an installed cost of $787,800. This cost will be depreciated straight-line to zero over the project's 4-year life, at the end of which the sausage system can be scrapped for $121,200. The sausage system will save the firm $242,400 per year in pretax operating costs, and the system requires an initial investment in net working capital of $56,560.

If the tax rate is 22 percent and the discount rate is 9 percent, what is the NPV of this project?

• $16,374.07

• $32,085.82

• $15,594.35

• $-34,885.86

• $-51,377.33