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Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and a $11,500 salvage value. The machine
Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and a $11,500 salvage value. The machine will lower operating costs by $18,000 per year and increase sales volume by 1,000 units per year. The company earns a contribution margin of $3.00 per unit. The company also expects this investment to provide qualitative benefits that it is struggling to incorporate into its financial analysis. Assuming the company's required rate of return is 17%, the minimum dollar value per year that must be provided by the machine's qualitative benefits to justify the $100,000 investment is closest to: Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice o $3,521. $3,831. $4,551. $4,621. 20 files merged). 5/6/2021 Saved Help Save & Exit Subm Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment Working capital required Annual net cash inflows Maintenance and repairs in third year Salvage value of equipment in fourth year $210,000 $ 50,000 $100,000 $ 40,000 $ 25,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The working capital will be released at the end of the project and the company's required rate of return is 12%. The net present value of the project is closest to: Multiple Choice $(58,720) $72.920
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