5

1. You plan to replace a $250,000 piece of equipment in 5 years. You want to ensure that you can pay for the equipment in cash.

   If your bank savings account pays 12% annually, about how much do you need to invest today in order to have $250,000 in 5 years?

   (Hint: Be sure to use a present value factor table.)

   		$21,000
   		$50,000
   		$123,000
   		$142,000
   		$167,941

0.4 points

Question 6

1. An investment opportunity will yield an annual $200,000 Cash Revenues (i.e., Cash Flow from Operations) and $40,000 in Cash-based Operating Expenses. This investment has $-0- Depreciation Expense, and Income Taxes are 25%.

   What is the PRE-TAX"INCREMENTAL CASH FLOW FROM OPERATIONS" from this opportunity?

   		$160,000
   		$40,000
   		$150,000
   		$120,000

0.4 points

Question 7

1. An investment opportunity will yield an annual $200,000 Cash Revenues (i.e., Cash Flow from Operations) and $40,000 in Cash-based Operating Expenses. This investment has $-0- Depreciation Expense, and Income Taxes are 25%.

   What is the "AFTER-TAX CASH FLOW FROM OPERATIONS" from this opportunity?

   		$150,000
   		$120,000
   		$40,000
   		$160,000