Can someone please provide an explanation as to how the following problems were solved. The correct answers are listed I just need a breakdown of how to solve them. Thanks. 13. Page Company is contemplating the acquisition of a machine that costs $50,000 and promises to reduce annual cash operating costs by $11,000 over each of the next six years. Which of the following is a proper way to evaluate this investment if the company desires a 12% return on all investments? A. $50,000 vs. $11,000 x 6. B. $50,000 vs. $66,000 x 0.507. C. $50,000 vs. $66,000 x 4.111. D. $50,000 vs. $11,000 x 4.111. E. $50,000 x 0.893 vs. $11,000 x 4.111. 14. Adams Company can acquire a $750,000 machine now that will benefit the firm over the next 8 years. Annual savings in cash operating costs are expected to total $140,000. If the hurdle rate is 10%, the investment's net present value is: A. $(226,960). B. $(3,100). C. $65,150. D. $370,000. E. some other amount. Answer: B LO: 1 Type: A 15. Reeder Company, which uses net present value to analyze investments, requires a 10% minimum rate of return. A staff assistant recently calculated a $500,000 machine's net present value to be $86,400, excluding the impact of straight-line depreciation. If Reeder ignores income taxes and the machine is expected to have a five-year service life, the correct net present value of the machine would be: A. $(13,600). B. $86,400. C. $186,400. D. $292,700. E. $465,500. Answer: B LO: 1 Type: A 16. A new asset is expected to provide service over the next four years. It will cost $500,000, generates annual cash inflows of $150,000, and requires cash operating expenses of $30,000 each year. In addition, a $10,000 overhaul will be needed in year 3. If the company requires a 10% rate of return, the net present value of this machine would be: A. $(127,110), and the machine meets the company's rate-of-return requirement. B. $(127,110), and the machine does not meet the company's rate-of-return requirement. C. $(129,600), and the machine does not meet the company's rate-of-return requirement. D. $(151,700), and the machine meets the company's rate-of-return requirement. E. some other amount. Answer: B LO: 1 Type: A 18.Paulsen is considering the acquisition of a $217,750 machine that is expected to produce annual savings in cash operating costs of $50,000 over the next six years. If Paulsen uses the internal rate of return (IRR) to evaluate new investments and the firm has a hurdle rate of 12%, which of the following statements is correct? A. The machine's IRR is less than 4%, and the machine should not be acquired. B. The machine's IRR is approximately 10%, and the machine should not be acquired. C. The machine's IRR is approximately 10%, and the machine should be acquired. D. The machine's IRR is approximately 12%, and the machine should be acquired. E. All of the preceding statements are false. Answer: B LO: 1 Type: A, N Use the following to answer questions 19-20: A machine costs $25,000; it is expected to generate annual cash revenues of $8,000 and annual cash expenses of $2,000 for five years. The required rate of return is 12%. 19. The net present value of the machine is: A. $(3,840). B. $(3,370). C. $0. D. $21,630. E. $28,840. Answer: B LO: 1 Type: A 20. Which of the following statements about the machine's internal rate of return is true? A. The internal rate of return is greater than 12%. B. The internal rate of return is between 10% and 12%. C. The internal rate of return is less than 10%. D. The internal rate of return must be greater than 15%. E. There is insufficient information to make any judgment about the internal rate of return. Answer: C LO: 1 Type: A