8 pt X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $62,000 per year; operating costs with the new machine are expected to be $49,000 per year. The new machine will cost $69,000 and will 1last for five years, at which time it can be sold for $2,500. The current machine will also last for five more years but will not be worth anything at that time. It cost $31,000 three years ago but is currently worth only $5,000. Assuming a discount rate of 4%, what is the incremental net present value of replacing the current machine with the new machine? 9. AO S-2,083 BO $-2,604 CO S-3,255 DO S-4,069 FO S-6,358 EO S-5,086 8 pt X Company is planning to launch a new product. A market research study, costing $110,000, was conducted last year, indicating that the product will be successful for the next four years. Profits from sales of the product are expected to be $156,000 in each of the first two years and $104,000 in each of the last two years. The company plans to undertake an immediate advertising campaign that will cost $86,000. New manufacturing equipment will have to be purchased for $330,000; it will have zero disposal value at the end of the four years. Assuming a discount rate of 5 %, what is the net present value of launching the new product? FO S71,354 EO $63,145 DO $55,881 BO $43,763 CO $49,452 10. AO $38,728 8 pt X Company must replace one of its current machines with either Machine A or Machine B. The useful life of both machines is seven years. Machine A costs $48,000, and Machine B costs $67,000. Estimated annual cash flows with the two machines are as follows: 67000 Machine A S-6,000 -8,000 -8,000 Machine B Year $-7,000 1 -4,000 2 -3,000 -3,000 3 -8,000 -6,000 -5,000 -4,000 4 -3,000 5 -2,000 6 -2,000 If X Company buys Machine B instead of Machine A, what is the payback period (in years)? 4 DO 5 EO 6 FO 7 11. AO 2 BO 3