11. 12. An existing machine can produce a cash inflow of $5,500 a year for 2 years and then will give up the ghost. The current salvage value of the machine is $5,000 and next year's salvage value is $4,400. A new machine, with a life of five years, can produce an equivalent annual cash inow of $4,000. What is the NPV achieved if the firm uses the existing machine for one more year and then keep on replacing with new machines over an infinite period of time? The opportunity cost of capital is 10%. (a) $12,636 (b) $45,364 (c) $46,264 (d) $49,000 (e) $49,900 If a project has the following estimated net future values: Year 0 Year 1 Year 2 Year 3 Year 4 Net future value $10,200 $12,000 $13,800 $15,600 $17,100 If the cost of capital is 10%, when should the project be undertaken? (a) Year 1 (b) Year 2 (c) Year 3 (d) Year 4 (e) Not to be undertaken