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ach of the following scenarios are independent. Assume that all cash flows are after-tax cash flows. Thomas Company is investing $120,000 in a project that

ach of the following scenarios are independent. Assume that all cash flows are after-tax cash flows.

  1. Thomas Company is investing $120,000 in a project that will yield a uniform series of cash inflows over the next 4 years.
  2. Video Repair has decided to invest in some new electronic equipment. The equipment will have a 3-year life and will produce a uniform series of cash savings. The NPV of the equipment is $1,750, using a discount rate of 8%. The IRR is 12%.
  3. A new lathe costing $60,096 will produce savings of $12,000 per year.
  4. The NPV of a project is $3,927. The project has a life of 4 years and produces the following cash flows:
Line Item Description Amount
Year 1 $10,000
Year 2 $12,000
Year 3 $15,000
Year 4 ?
  1. The cost of the project is two times the cash flow produced in Year 4. The discount rate is 10%.

Required:

Round your answers to the nearest dollar.

1. If the internal rate of return is 14% for Thomas Company, how much cash inflow per year can be expected? fill in the blank 1 of 1$per year

2. Determine the investment and the amount of cash savings realized each year for Video Repair.

Line Item Description Amount
Savings each year $fill in the blank 2
Original investment $fill in the blank 3

3. For Scenario c, how many years must the lathe last if an IRR of 18% is realized? fill in the blank 1 of 1years

4. For Scenario d, find the cost of the project and the cash flow for Year 4.

Line Item Description Amount
Cost of the project $fill in the blank 5
Cash flow for year 4 $fill in the blank 6

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