1.

Speed Queen Laundromat faces a 40% tax rate and uses a 10.5% discount rate. Speed Queen is purchasing a new $45,300 touchscreen laundry system that will raise annual sales by $8,900 and lower annual operating costs by $13,000. This system, which will have no salvage value, is expected to have a 4-year life and will be depreciated (straight-line) to zero. What is the NPV of purchasing the new laundry system?

Multiple Choice

• $3,478

• $23,380

• $10,111

• $17,213

• $3,624

2.

Eskom, Inc. has 4-year project in South Africa with an annual operating cash flow of $57,000. Eskom spent $23,500 on an Electricity Supply Solar Tower to start the project. At the end of the project, the Electricity Supply Solar Tower will have a book value of $5,100, but can be salvaged for $6,000. If Eskoms tax rate is 40%, what is the cash flow in Year 4? Note: Net working capital of $4,800 was needed at the start of the project. That money will be recovered at the end of the project.

Multiple Choice

• $65,400

• $67,440

• $25,056

• $57,840

• $68,160