1.

Tamarack Aerospace is buying a used Cessna Citation CJ1 jet for $840,000 which they expect to fly for 3 years before it needs to be replaced. The Cessnas annual operating cost is $10,000. If Tamaracks required rate of return is 12%, what is the jets EAC? (Round your answer to whole dollars)

Multiple Choice

• $-339,287

• $-365,596

• $-361,879

• $-354,396

• $-359,733

2.

Colorado Springs painter and graphic designer Steve Weed is investing $54,000 in assets to expand his fine art business. These assets cannot be salvaged at the end of the project. Weed expects operating cash flows of $20,500 per year for 5 years as a result of the expansion. If $4,800 of net working capital are needed throughout the life of the project, what is the NPV of the expansion? Note: Steve Weed faces a 13% cost of capital.

Multiple Choice

• $21,013

• $15,908

• $22,180

• $19,612

• $18,103