If you invested $1,500 in a stock today and it earned an 10 return in each of the next three years, then the value of the stock at the end of three years would be closest to Assume that an investment provides the following cash inflows over a three year period Year 1 $ 5,000 Year 2 5,000 Year 3 7,000 Total $ 17,000 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 15 , what is the present value of these cash inflows Assume that a company purchased a new machine for $18,000 that has a salvage value of $5,000 at the end of its useful life of five years The machine is expected to save the company $6,000 a year in cash operating costs for five years The companys discount rate is 15 The profitability index of this investment opportunity 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 Assume that a company is considering a $2,400,000 capital investment in a project that would earn net income for each of the next five years as follows Sales $ 1,900,000 Variable expenses 800,000 Contribution margin 1,100,000 Fixed expenses Out of pocket operating costs $ 300,000 Depreciation 400,000 700,000 Net operating income $ 400,000 Click here to view Exhibit 14B 1 and Exhibit 14B 2, to determine the appropriate discount factor(s) using the tables provided If the companys discount rate is 17 , then the projects net present value is closest to Assume the following information for a capital budgeting proposal with a five year time horizon Initial investment Cost of equipment (zero salvage value) $ 550,000 Annual revenues and costs Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out of pocket costs $ 40,000 This proposals simple rate of return is closest to Assume the following information for a capital budgeting proposal with a five year time horizon Initial investment Cost of equipment (zero salvage value) $ 400,000 Annual revenues and costs Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out of pocket costs $ 40,000 Click here to view Exhibit 14B 1 and Exhibit 14B 2, to determine the appropriate discount factor(s) using the tables provided If the companys discount rate is 12 , then the net present value for this investment is closest to Assume that a company is considering purchasing a machine for $50,000 that will have a five year useful life and a $5,000 salvage value The machine will lower operating costs by $17,750 per year The companys required rate of return is 17 The net present value of this 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 Assume the following information for a capital budgeting proposal with a five year time horizon Initial investment Cost of equipment (zero salvage value) $ 580,000 Annual revenues and costs Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out of pocket costs $ 40,000 The payback period for this investment is closest to 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 $26,000 The equipment would generate the following estimated annual revenues and expenses Revenues $ 120,000 Less operating expenses Commissions $ 15,000 Insurance 5,000 Depreciation 44,800 Maintenance 30,000 94,800 Net operating income $ 25,200 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 17 , what is the net present value of this investment Assume that a company is considering purchasing a new piece of equipment for $240,000 that would have a useful life of 10 years and no salvage value The new equipment would cost $20,000 per year to operate and it would replace an old piece of equipment that costs $52,000 per year to operate The old equipment currently being used could be sold for a salvage value of $40,000 The simple rate of return for the new equipment is closest to

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If you invested $1,500 in a stock today and it earned an 10% return in each of the next three years, then the value of

If you invested $1,500 in a stock today and it earned an 10% return in each of the next three years, then the value of the stock at the end of three years would be closest to:

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Assume that an investment provides the following cash inflows over a three-year period:

Year 1	$ 5,000
Year 2	5,000
Year 3	7,000
Total	$ 17,000

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 15%, what is the present value of these cash inflows?

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Assume that a company purchased a new machine for $18,000 that has a salvage value of $5,000 at the end of its useful life of five years. The machine is expected to save the company $6,000 a year in cash operating costs for five years. The companys discount rate is 15%. The profitability index of this investment opportunity 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.

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Assume that a company is considering a $2,400,000 capital investment in a project that would earn net income for each of the next five years as follows:

Sales		$ 1,900,000
Variable expenses		800,000
Contribution margin		1,100,000
Fixed expenses:
Out-of-pocket operating costs	$ 300,000
Depreciation	400,000	700,000
Net operating income		$ 400,000

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the companys discount rate is 17%, then the projects net present value is closest to:

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Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:
Cost of equipment (zero salvage value)	$ 550,000
Annual revenues and costs:
Sales revenues	$ 300,000
Variable expenses	$ 130,000
Depreciation expense	$ 50,000
Fixed out-of-pocket costs	$ 40,000

This proposals simple rate of return is closest to:

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Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:
Cost of equipment (zero salvage value)	$ 400,000
Annual revenues and costs:
Sales revenues	$ 300,000
Variable expenses	$ 130,000
Depreciation expense	$ 50,000
Fixed out-of-pocket costs	$ 40,000

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the companys discount rate is 12%, then the net present value for this investment is closest to:

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Assume that a company is considering purchasing a machine for $50,000 that will have a five-year useful life and a $5,000 salvage value. The machine will lower operating costs by $17,750 per year. The companys required rate of return is 17%. The net present value of this 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.

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Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:
Cost of equipment (zero salvage value)	$ 580,000
Annual revenues and costs:
Sales revenues	$ 300,000
Variable expenses	$ 130,000
Depreciation expense	$ 50,000
Fixed out-of-pocket costs	$ 40,000

The payback period for this investment is closest to:

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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 $26,000. The equipment would generate the following estimated annual revenues and expenses:

Revenues		$ 120,000
Less operating expenses:
Commissions	$ 15,000
Insurance	5,000
Depreciation	44,800
Maintenance	30,000	94,800
Net operating income		$ 25,200

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 17%, what is the net present value of this investment?

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Assume that a company is considering purchasing a new piece of equipment for $240,000 that would have a useful life of 10 years and no salvage value. The new equipment would cost $20,000 per year to operate and it would replace an old piece of equipment that costs $52,000 per year to operate. The old equipment currently being used could be sold for a salvage value of $40,000. The simple rate of return for the new equipment is closest to:

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