#3. Your small remodeling business has two work vehicles. One is a small passenger car used for job site visits and for other general business purposes. The other is a heavy truck used to haul equipment. The car gets 25 miles per gallon (mpg). The truck gets 10 mpg. You want to improve gas mileage to save money, and you have enough money to upgrade one vehicle. The upgrade cost will be the same for both vehicles. An upgraded car will get 40 mpg; an upgraded truck will get 12.5 mpg. The cost of gasoline is $2.65 per gallon.

Calculate the annual fuel savings in gallons for the truck and car assuming both vehicles are driven 12,000 miles per year. (Do not round intermediate calculations.)

Truck: ??? gallons per year

Car: ??? gallons per year

#7. An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $17,280,000 and will be sold for $3,840,000 at the end of the project.

If the tax rate is 22 percent, what is the after-tax salvage value of the asset?

1. $3,652,116
2. $2,995,200
3. $4,027,884
4. $3,834,722
5. $3,469,511

#9. Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.32 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1.735 million in annual sales, with costs of $650,000. If the tax rate is 21 percent, what is the OCF for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

OCF - ???