8 Tudor's Manufacturing purchased a lot in Sin City 8 years ago at a cost of $810,000, Today, that lot has a market value of $1.1 million. At the time of the purchase, the company spent $115,000 to grade the lot and another $17,500 to build a small garage on the lot to house additional equipment. The company now wants to build a new facility on the site. The building cost is estimated at $1.95 million. What amount should be used as the initial cash flow for this project? a) -$2,892,500 Ob) -$3,182,500 c) -$2.760,000 d) -$3,050,000 e) -$3,860,000 Page 4 of 15 Drulote Pae Next Page Service Experts is considering a 5-year project with an initial cost of $850,000.00 The project will not directly produce any sales but will reduce operating costs by $304,183.35 a year. The equipment is depreciated straight-line to a book value of $5,000.00 over the life of the project. At the end of the project the equipment will be sold for an estimated $40,000.00 before taxes. The tax rate is 35%. The project will require $35,000.00 in extra inventory for spare parts and accessories. Should this project be implemented if the company requires a 9% rate of return? Why or why not? 7 NI a) Yes; The NPV is $33,769.38. 1 b) No; The NPV is -$87,820.47. Oc) No; The NPV is -$81,429.27. d) Yes: The NPV is $153,777.34. e) No; The NPV is - $128,147.15. Question 18 (1 point) You just won the lottery! As your prize you will receive $1,418.16 a month for 21 years. If you can earn 9.25% on your money, what is this prize worth to you today? a) $166,717.33 Ob) $164,313.72 c) $152,087.09 d) $156,098.19 e) $157,408.06 Question 19 (1 point) A75 and Question 19 (1 point) The preferred stock of North Eastern Limited pays an annual dividend of $4.75 and sells for $50.25 a share. What is the rate of return on this security? a) 10.48% b) 9.45% c) 10.77% d) 9.83% e) 10.58% Question 20 (1 point)