All of it please

Chapter 13-Capital Budgeting Homework Initial investment 1. Jubilee Corporation is considering the purchase of a new machine costing $100,000. Sales tax on the machine is 6%. Freight costs to have the machine delivered will be $1,000. Installation and setup costs will be an additional $3,000. What is the net present value of the initial investment? Cash inflows and outflows The machine Jubilee Corporation is considering for purchase (Item 1 above) has an estimated useful life of 5 years. If the new machine is purchased, pretax cash flows are estimated as follows: 2. Pretax cash inflows Year 1 Year 2 Year 3 Year 4 Year 5 $40,500 50,400 44,100 40,500 37,200 Pretax cash outflows $18,000 27,000 22,500 20,700 18,000 Jubilee's cost of capital is 10% and its tax rate is 30%. Calculate the after-tax net present value of the estimated cash flows. 3. Barrel Manufacturing plans to purchase new manufacturing equipment to use in the production of wooden barrels. Barrel Manufacturing estimates it will save $4,200 during each year of the equipment's ten-year life. Barrers cost of capital is 8% and its tax rate is 30%. Calculate the after-tax net present value of the estimated cash flows. Tax shield from depreciation 4. Buck N Ride Co. is considering the purchase of a mechanical horse for $15,500. Buck N Ride estimates the useful life of the mechanical horse to be 5 years and does not expect to receive any salvage value at the end of its useful life. Buck N Ride uses the straight- line method of depreciation. Buck N Ride's cost of capital is 12% and its tax rate is 35%. Calculate the net present value of the cash savings due to depreciation. 97 Chapter 13-Capital Budgeting Homework Initial investment 1. Jubilee Corporation is considering the purchase of a new machine costing $100,000. Sales tax on the machine is 6%. Freight costs to have the machine delivered will be $1,000. Installation and setup costs will be an additional $3,000. What is the net present value of the initial investment? Cash inflows and outflows The machine Jubilee Corporation is considering for purchase (Item 1 above) has an estimated useful life of 5 years. If the new machine is purchased, pretax cash flows are estimated as follows: 2. Pretax cash inflows Year 1 Year 2 Year 3 Year 4 Year 5 $40,500 50,400 44,100 40,500 37,200 Pretax cash outflows $18,000 27,000 22,500 20,700 18,000 Jubilee's cost of capital is 10% and its tax rate is 30%. Calculate the after-tax net present value of the estimated cash flows. 3. Barrel Manufacturing plans to purchase new manufacturing equipment to use in the production of wooden barrels. Barrel Manufacturing estimates it will save $4,200 during each year of the equipment's ten-year life. Barrers cost of capital is 8% and its tax rate is 30%. Calculate the after-tax net present value of the estimated cash flows. Tax shield from depreciation 4. Buck N Ride Co. is considering the purchase of a mechanical horse for $15,500. Buck N Ride estimates the useful life of the mechanical horse to be 5 years and does not expect to receive any salvage value at the end of its useful life. Buck N Ride uses the straight- line method of depreciation. Buck N Ride's cost of capital is 12% and its tax rate is 35%. Calculate the net present value of the cash savings due to depreciation. 97