1.You are evaluating a potential investment in equipment. The equipment's basic price is $190,000, and shipping costs will be $5,700. It will cost another $24,700 to modify it for special use by your firm, and an additional $11,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 27,800 at the end of three years. The equipment is expected to generate revenues of $181,000 per year with annual operating costs of $92,000. The firm's marginal tax rate is 40.0%. What is the value of the after-tax cash flow associated with the sale of the equipment?

Question 25 options:

	$16,680
	$23,170
	$11,574
	$6,944
	$11,596

2.You are evaluating a potential purchase of several light-duty trucks. The initial cost of the trucks will be $235,000. The trucks fall in the MACRS 5-year class that allows depreciation of 20% the first year, 32% the second year, 19% the third year, 12% the fourth year, 11% the fifth year, and 6% the sixth year. You expect to sell the trucks for 28,200 at the end of five years. The expected revenue associated with the trucks is $186,000 per year with annual operating costs of $86,000. The firm's marginal tax rate is 45.0%. What is the after-tax operating cash flow for year 2?

	$13,640
	$88,840
	$55,000
	$24,800
	$75,200