Assume that a company has provided the following information regarding a capital investment opportunity: 19 Initial investment in equipment Initial investment in working capital Estimated annual sales Estimated annual cash operating expenses 8 00:52:25 $150,000 $ 25,000 $140,000 $ 80,000 Skipped eBook The equipment has a six-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 16%, the present value of all relevant cash flows from year 3 is closest to: Multiple Choice $26,922. Assume the following information for a capital budgeting proposal with a five-year time horizon: 18 $380,000 X 00:52:19 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs Skipped $300,000 $ 130,000 $ 50,000 $ 40,000 eBook Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 12%, this proposal's profitability index is closest to: Multiple Choice 1.28. 16 Assume that a company is considering buying a new piece of equipment for $200,000 that would have a useful life of five years and a salvage value of $30,000. The equipment would generate the following estimated annual revenues and expenses: X 00:51:55 $120,000 Skipped Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $15,000 5,000 34,000 30,000 eBook 84,000 $ 36,000 Assuming a discount rate of $15%, the profitability index for this investment is closest to: Multiple Choice O 1.35 Assume the following information for a capital budgeting proposal with a five-year time horizon: 1 $570,000 0:51:39 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs oped $300,000 $130,000 $ 50,000 $ 40,000 pok The payback period for this investment is closest to: Multiple Choice 4.38 vears Assume that a company is considering buying a new piece of equipment for $250,000 that would have a useful life of five years and a salvage value of $34,000. The equipment would generate the following estimated annual revenues and expenses: $120,000 Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $15,000 5,000 43,200 30,000 93,200 $ 26,800 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 14%, what is the net present value of this investment? Multiple Choice Assume that a company has provided the following information regarding a capital investment opportunity: 19 Initial investment in equipment Initial investment in working capital Estimated annual sales Estimated annual cash operating expenses 8 00:52:25 $150,000 $ 25,000 $140,000 $ 80,000 Skipped eBook The equipment has a six-year useful life and no salvage value. The working capital will be released at the end of the project. The company's tax rate is 30%. Assuming a discount rate of 16%, the present value of all relevant cash flows from year 3 is closest to: Multiple Choice $26,922. Assume the following information for a capital budgeting proposal with a five-year time horizon: 18 $380,000 X 00:52:19 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs Skipped $300,000 $ 130,000 $ 50,000 $ 40,000 eBook Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 12%, this proposal's profitability index is closest to: Multiple Choice 1.28. 16 Assume that a company is considering buying a new piece of equipment for $200,000 that would have a useful life of five years and a salvage value of $30,000. The equipment would generate the following estimated annual revenues and expenses: X 00:51:55 $120,000 Skipped Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $15,000 5,000 34,000 30,000 eBook 84,000 $ 36,000 Assuming a discount rate of $15%, the profitability index for this investment is closest to: Multiple Choice O 1.35 Assume the following information for a capital budgeting proposal with a five-year time horizon: 1 $570,000 0:51:39 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket costs oped $300,000 $130,000 $ 50,000 $ 40,000 pok The payback period for this investment is closest to: Multiple Choice 4.38 vears Assume that a company is considering buying a new piece of equipment for $250,000 that would have a useful life of five years and a salvage value of $34,000. The equipment would generate the following estimated annual revenues and expenses: $120,000 Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $15,000 5,000 43,200 30,000 93,200 $ 26,800 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 14%, what is the net present value of this investment? Multiple Choice