DUE IN 2 HOURS Question QUESTION 8 Suppose a company has proposed a new 4 year project The project has an initial outlay of $58,000 and has expected cash flows of $15,000 in year 1, $23,000 in year 2, $29,000 in year 3, and $31,000 in year 4 The required rate of return is 14 for projects at this company What is the Payback for this project (Answer to the nearest tenth of a year, e g 1 2) 3 points QUESTION 9 Suppose a company has proposed a new 5 year project The project has an initial outlay of $22,000 and has expected cash flows of $3,000 in year 1, $5,000 in year 2, $5,000 in year 3, $6,000 in year 4, and $7,000 in year 5 The required rate of return is 18 for projects at this company What is the Payback for this project (Answer to the nearest tenth of a year, e g 3 2) 3 points QUESTION 10 Suppose a company has proposed a new 4 year project The project has an initial outlay of $71,000 and has expected cash flows of $19,000 in year 1, $23,000 in year 2, $27,000 in year 3, and $34,000 in year 4 The required rate of return is 10 for projects at this company What is the discounted payback for this project (Answer to the nearest tenth of a year, e g 3 2) 3 points QUESTION 11 Suppose a company has proposed a new 5 year project The project has an initial outlay of $168,000 and has expected cash flows of $36,000 in year 1, $48,000 in year 2, $57,000 in year 3, $69,000 in year 4, and $79,000 in year 5 The required rate of return is 15 for projects at this company What is the discounted payback for this project (Answer to the nearest tenth of a year, e g 3 2) 3 points QUESTION 12 Suppose a company has proposed a new 5 year project The project has an initial outlay of $176,000 and has expected cash flows of $33,000 in year 1, $44,000 in year 2, $58,000 in year 3, $63,000 in year 4, and $73,000 in year 5 The required rate of return is 16 for projects at this company What is the net present value for this project (Answer to the nearest dollar ) 3 points QUESTION 13 Suppose a company has proposed a new 4 year project The project has an initial outlay of $28,000 and has expected cash flows of $7,000 in year 1, $9,000 in year 2, $12,000 in year 3, and $13,000 in year 4 The required rate of return is 11 for projects at this company What is the net present value for this project (Answer to the nearest dollar ) 3 points QUESTION 14 Suppose a company has two mutually exclusive projects, both of which are three years in length Project A has an initial outlay of $6,000 and has expected cash flows of $2,000 in year 1, $4,000 in year 2, and $4,000 in year 3 Project B has an initial outlay of $7,000 and has expected cash flows of $2,000 in year 1, $3,000 in year 2, and $6,000 in year 3 The required rate of return is 11 for projects at this company What is the net present value for the best project (Answer to the nearest dollar ) 4 points QUESTION 15 If a project has an initial outlay of $40,000 and cash flows of $11,000 per year for the next 5 years, what is the IRR of this project (Answer to the nearest tenth of a percent, e g 12 3) 3 points QUESTION 16 Suppose a company has proposed a new 5 year project The project has an initial outlay of $246,000 and has expected cash flows of $36,000 in year 1, $45,000 in year 2, $54,000 in year 3, $63,000 in year 4, and $78,000 in year 5 The required rate of return is 15 for projects at this company What is the profitability index for this project (Answer to the nearest hundredth, e g 1 23) 3 points QUESTION 17 Suppose a company has proposed a new 4 year project The project has an initial outlay of $29,000 and has expected cash flows of $7,000 in year 1, $10,000 in year 2, $10,000 in year 3, and $13,000 in year 4 The required rate of return is 11 for projects at this company What is the profitability index for this project (Answer to the nearest hundredth, e g 1 23) 3 points QUESTION 18 A company is considering a 5 year project to open a new product line A new machine with an installed cost of $100,000 would be required to manufacture their new product, which is estimated to produce sales of $120,000 in new revenues each year The cost of goods sold to produce these sales (not including depreciation) is estimated at 46 of sales, and the tax rate at this firm is 37 If straight line depreciation is used to calculate annual depreciation, what is the estimated annual operating cash flow from this project each year (Answer to the nearest dollar ) 5 points QUESTION 19 A company is considering a 6 year project that requires an initial outlay of $25,000 The project engineer has estimated that the operating cash flows will be $3,000 in year 1, $5,000 in year 2, $7,000 in year 3, $7,000 in year 4, $7,000 in year 5, and $8,000 in year 6 At the end of the project, the equipment will be fully depreciated, classified as 5 year property under MACRS The project engineer believes the equipment can be sold for $5,000 at the end of the project If the tax rate is 30 and the required rate of return is 15 , what is the net present value (NPV) of this project (Answer to the nearest dollar ) 5 points QUESTION 20 A company is considering a 3 year project that requires an initial installed equipment cost of $9,000 The project engineer has estimated that the operating cash flows will be $5,000 in year 1, $6,000 in year 2, and $9,000 in year 3 The new machine will also require a parts inventory of $1,000 at the beginning of the project (assume this inventory can be sold for cost at the end of the project) It is also estimated that the equipment can be sold as salvage for an after tax salvage cash flow of $6,000 at the end of the project If the tax rate is 30 and the required rate of return is 12 , what is the net present value (NPV) of this project (Answer to the nearest dollar ) 5 points QUESTION 21 A company is considering a 5 year project to expand production with the purchase of a new automated machine using the latest technology The new machine would cost $220,000 FOB St Louis, with a shipping cost of $8,000 to the plant location Installation expenses of $11,000 would also be required This new machine would be classified as 7 year property for MACRS depreciation purposes The project engineers anticipate that this equipment could be sold for salvage for $42,000 at the end of the project If the corporate tax rate is 25 , what is the after tax salvage cash flow for this new machine at the end of the project (Answer to the nearest dollar ) MACRS percentages for depreciation each year are as follows Year 1 14 29 2 24 49 3 17 49 4 12 49 5 8 93 6 8 93 7 8 93 8 4 45 5 points QUESTION 22 A company is considering an 8 year project to expand into a new geographical area The project requires a new machine, which would cost $230,000 FOB San Francisco, with a shipping cost of $8,000 to the new plant location Installation expenses of $13,000 would also be required This new machine would be classified as 7 year property for MACRS depreciation purposes The project engineers anticipate that this equipment could be sold for salvage for $40,000 at the end of the project If the corporate tax rate is 31 , what is the after tax salvage cash flow for this new machine at the end of the project (Answer to the nearest dollar ) MACRS percentages for depreciation each year are as follows Year 1 14 29 2 24 49 3 17 49 4 12 49 5 8 93 6 8 93 7 8 93 8 4 45 5 points QUESTION 23 A company is considering a 5 year project that opens a new product line and requires an initial outlay of $81,000 The assumed selling price is $96 per unit, and the variable cost is $53 per unit Fixed costs not including depreciation are $16,000 per year Assume depreciation is calculated using stright line down to zero salvage value If the required rate of return is 13 per year, what is the accounting break even point (Answer to the nearest whole unit ) 4 points QUESTION 24 A company is considering a 5 year project that opens a new product line and requires an initial outlay of $76,000 The assumed selling price is $92 per unit, and the variable cost is $60 per unit Fixed costs not including depreciation are $21,000 per year Assume depreciation is calculated using stright line down to zero salvage value If the required rate of return is 10 per year, what is the cash break even point (Answer to the nearest whole unit ) 4 points QUESTION 25 A company is considering a 5 year project that opens a new product line and requires an initial outlay of $79,000 The assumed selling price is $93 per unit, and the variable cost is $51 per unit Fixed costs not including depreciation are $24,000 per year Assume depreciation is calculated using stright line down to zero salvage value If the required rate of return is 13 per year, what is the financial break even point (Answer to the nearest whole unit ) 4 points QUESTION 26 Suppose that a company purchased some land 5 years ago for $1,000,000 and they now want to use this land to build a new manufacturing plant Recently they received an offer from a commercial real estate firm to purchase the land for $1,500,000 However, the company prefers to build a plant on that land instead, assuming the project is profitable To build the plant, they must first remove some trees and an existing structure at a cost of $500,000 The construction of the plant itself will cost $3,000,000 What is the proper cash flow to use as the initial investment for this project a $500,000b $1,000,000c $1,500,000d $2,000,000e $2,500,000f $3,000,000g $3,500,000h $4,000,000i $4,500,000j $5,000,000k $5,500,000l $6,000,000

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DUE IN 2 HOURS! Question: QUESTION 8 Suppose a company has proposed a new 4-year project. The project has an initial outlay of $58,000 and

DUE IN 2 HOURS!

Question:QUESTION 8

Suppose a company has proposed a new 4-year project. The project has an initial outlay of $58,000 and has expected cash flows of $15,000 in year 1, $23,000 in year 2, $29,000 in year 3, and $31,000 in year 4. The required rate of return is 14% for projects at this company. What is the Payback for this project? (Answer to the nearest tenth of a year, e.g. 1.2)

3 points

QUESTION 9

Suppose a company has proposed a new 5-year project. The project has an initial outlay of $22,000 and has expected cash flows of $3,000 in year 1, $5,000 in year 2, $5,000 in year 3, $6,000 in year 4, and $7,000 in year 5. The required rate of return is 18% for projects at this company. What is the Payback for this project? (Answer to the nearest tenth of a year, e.g. 3.2)

3 points

QUESTION 10

Suppose a company has proposed a new 4-year project. The project has an initial outlay of $71,000 and has expected cash flows of $19,000 in year 1, $23,000 in year 2, $27,000 in year 3, and $34,000 in year 4. The required rate of return is 10% for projects at this company. What is the discounted payback for this project? (Answer to the nearest tenth of a year, e.g. 3.2)

3 points

QUESTION 11

Suppose a company has proposed a new 5-year project. The project has an initial outlay of $168,000 and has expected cash flows of $36,000 in year 1, $48,000 in year 2, $57,000 in year 3, $69,000 in year 4, and $79,000 in year 5. The required rate of return is 15% for projects at this company. What is the discounted payback for this project? (Answer to the nearest tenth of a year, e.g. 3.2)

3 points

QUESTION 12

Suppose a company has proposed a new 5-year project. The project has an initial outlay of $176,000 and has expected cash flows of $33,000 in year 1, $44,000 in year 2, $58,000 in year 3, $63,000 in year 4, and $73,000 in year 5. The required rate of return is 16% for projects at this company. What is the net present value for this project? (Answer to the nearest dollar.)

3 points

QUESTION 13

Suppose a company has proposed a new 4-year project. The project has an initial outlay of $28,000 and has expected cash flows of $7,000 in year 1, $9,000 in year 2, $12,000 in year 3, and $13,000 in year 4. The required rate of return is 11% for projects at this company. What is the net present value for this project? (Answer to the nearest dollar.)

3 points

QUESTION 14

Suppose a company has two mutually exclusive projects, both of which are three years in length. Project A has an initial outlay of $6,000 and has expected cash flows of $2,000 in year 1, $4,000 in year 2, and $4,000 in year 3. Project B has an initial outlay of $7,000 and has expected cash flows of $2,000 in year 1, $3,000 in year 2, and $6,000 in year 3. The required rate of return is 11% for projects at this company. What is the net present value for the best project? (Answer to the nearest dollar.)

4 points

QUESTION 15

If a project has an initial outlay of $40,000 and cash flows of $11,000 per year for the next 5 years, what is the IRR of this project? (Answer to the nearest tenth of a percent, e.g. 12.3).

3 points

QUESTION 16

Suppose a company has proposed a new 5-year project. The project has an initial outlay of $246,000 and has expected cash flows of $36,000 in year 1, $45,000 in year 2, $54,000 in year 3, $63,000 in year 4, and $78,000 in year 5. The required rate of return is 15% for projects at this company. What is the profitability index for this project? (Answer to the nearest hundredth, e.g. 1.23)

3 points

QUESTION 17

Suppose a company has proposed a new 4-year project. The project has an initial outlay of $29,000 and has expected cash flows of $7,000 in year 1, $10,000 in year 2, $10,000 in year 3, and $13,000 in year 4. The required rate of return is 11% for projects at this company. What is the profitability index for this project? (Answer to the nearest hundredth, e.g. 1.23)

3 points

QUESTION 18

A company is considering a 5-year project to open a new product line. A new machine with an installed cost of $100,000 would be required to manufacture their new product, which is estimated to produce sales of $120,000 in new revenues each year. The cost of goods sold to produce these sales (not including depreciation) is estimated at 46% of sales, and the tax rate at this firm is 37%. If straight-line depreciation is used to calculate annual depreciation, what is the estimated annual operating cash flow from this project each year? (Answer to the nearest dollar.)

5 points

QUESTION 19

A company is considering a 6-year project that requires an initial outlay of $25,000. The project engineer has estimated that the operating cash flows will be $3,000 in year 1, $5,000 in year 2, $7,000 in year 3, $7,000 in year 4, $7,000 in year 5, and $8,000 in year 6. At the end of the project, the equipment will be fully depreciated, classified as 5-year property under MACRS. The project engineer believes the equipment can be sold for $5,000 at the end of the project. If the tax rate is 30% and the required rate of return is 15%, what is the net present value (NPV) of this project? (Answer to the nearest dollar.)

5 points

QUESTION 20

A company is considering a 3-year project that requires an initial installed equipment cost of $9,000. The project engineer has estimated that the operating cash flows will be $5,000 in year 1, $6,000 in year 2, and $9,000 in year 3. The new machine will also require a parts inventory of $1,000 at the beginning of the project (assume this inventory can be sold for cost at the end of the project). It is also estimated that the equipment can be sold as salvage for an after tax salvage cash flow of $6,000 at the end of the project. If the tax rate is 30% and the required rate of return is 12%, what is the net present value (NPV) of this project? (Answer to the nearest dollar.)

5 points

QUESTION 21

A company is considering a 5-year project to expand production with the purchase of a new automated machine using the latest technology. The new machine would cost $220,000 FOB St. Louis, with a shipping cost of $8,000 to the plant location. Installation expenses of $11,000 would also be required. This new machine would be classified as 7-year property for MACRS depreciation purposes. The project engineers anticipate that this equipment could be sold for salvage for $42,000 at the end of the project. If the corporate tax rate is 25%, what is the after tax salvage cash flow for this new machine at the end of the project? (Answer to the nearest dollar.)
MACRS percentages for depreciation each year are as follows:

 Year % 1 14.29 2 24.49 3 17.49 4 12.49 5 8.93 6 8.93 7 8.93 8 4.45

5 points

QUESTION 22

A company is considering an 8-year project to expand into a new geographical area. The project requires a new machine, which would cost $230,000 FOB San Francisco, with a shipping cost of $8,000 to the new plant location. Installation expenses of $13,000 would also be required. This new machine would be classified as 7-year property for MACRS depreciation purposes. The project engineers anticipate that this equipment could be sold for salvage for $40,000 at the end of the project. If the corporate tax rate is 31%, what is the after tax salvage cash flow for this new machine at the end of the project? (Answer to the nearest dollar.)
MACRS percentages for depreciation each year are as follows:

 Year % 1 14.29 2 24.49 3 17.49 4 12.49 5 8.93 6 8.93 7 8.93 8 4.45

5 points

QUESTION 23

A company is considering a 5-year project that opens a new product line and requires an initial outlay of $81,000. The assumed selling price is $96 per unit, and the variable cost is $53 per unit. Fixed costs not including depreciation are $16,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 13% per year, what is the accounting break-even point? (Answer to the nearest whole unit.)

4 points

QUESTION 24

A company is considering a 5-year project that opens a new product line and requires an initial outlay of $76,000. The assumed selling price is $92 per unit, and the variable cost is $60 per unit. Fixed costs not including depreciation are $21,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 10% per year, what is the cash break-even point? (Answer to the nearest whole unit.)

4 points

QUESTION 25

A company is considering a 5-year project that opens a new product line and requires an initial outlay of $79,000. The assumed selling price is $93 per unit, and the variable cost is $51 per unit. Fixed costs not including depreciation are $24,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 13% per year, what is the financial break-even point? (Answer to the nearest whole unit.)

4 points

QUESTION 26

Suppose that a company purchased some land 5 years ago for $1,000,000 and they now want to use this land to build a new manufacturing plant. Recently they received an offer from a commercial real estate firm to purchase the land for $1,500,000. However, the company prefers to build a plant on that land instead, assuming the project is profitable. To build the plant, they must first remove some trees and an existing structure at a cost of $500,000. The construction of the plant itself will cost $3,000,000. What is the proper cash flow to use as the initial investment for this project?
a.$500,000b.$1,000,000c.$1,500,000d.$2,000,000e.$2,500,000f.$3,000,000g.$3,500,000h.$4,000,000i.$4,500,000j.$5,000,000k.$5,500,000l.$6,000,000