1.) Three people are starting a communications service business. They expect to have net operating losses of $120,000 per year for the first two years, followed by net operating profits of $240,000 per year for the next eight years. The minimum attractive rate of return is 18%. The net present worth of the expected cash flow is most nearly Top of Form (A) $500,000 (B) $800,000 (C) $1,000,000 (D) $1,800,000

2.)Assuming modified accelerated cost-recovery-system depreciation and an economic life of five years, what is the book value after three years of an asset of initial cost P? Top of Form (A) 0.288P (B) 0.422P (C) 0.808P (D) 0.852P

3.)A new medical instrument costs $50,000. Operating, maintenance, and repair costs are $10,000 for the first year, $25,000 for the second year, $40,000 for the third year, and $55,000 for the fourth year. The minimum attractive rate of return is 10%. Company policy is to replace the instrument when it is three years old. The highest price that the company should be willing to pay for a one-year-old instrument is most nearly Top of Form (A) $0 (B) $20,800 (C) $33,300 (D) $35,000