A.)

(Ignore income taxes in this problem.) The following data pertain to an investment proposal:

Cost of the investment	$50,000
Annual cost savings	$16,000
Estimated salvage value	$6,000
Life of the project	5 years
Discount rate	11%

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table.

The net present value of the proposed investment is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

$12,694

$9,136

$3,558

$28,000

B.)

The management of Urbine Corporation is considering the purchase of a machine that would cost $300,000 would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $70,000 per year. The company requires a minimum pretax return of 12% on all investment projects. (Ignore income taxes in this problem.)

Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.

The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

$47,650

$7,650

$70,330

$24,970

C.)

The management of Londo Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 6 years. The company uses a discount rate of 20% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is $474,420. (Ignore income taxes in this problem)

Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.

How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)

$474,420

$142,640

$79,070

$94,884