1. In the Swirl" Corporation makes swizzle sticks and is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $100,000 and will generate after-tax cash inflows of $18,000 per year for 10 years. If the required rate of return is 15% what is the NPV?

2.Jefferson Development, an all-equity firm, is analyzing a potential project which will require the initial, after-tax cash outlay of $30,000 and after-tax cash inflows of $6,000 per year for 10 years. Also, this project will have an after-tax salvage value of $10,000 at the end of Year 10. If the risk-free rate is 6 percent, the return on an average stock is 10 percent, and the beta of this project is 1.50, then what is the project's NPV?

3.The following is the fact pattern:

• You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck.
• The truck's basic price is $50,000, and it will cost another $10,000 to modify it for special use by your firm.
• The truck falls into the MACRS three-year class, and it will be sold after three years for $20,000.
• The use of the truck will require an increase in net working capital (spare parts inventory) of $2,000.
• The truck will not affect revenue, but it is expected to save the firm $20,000 per year, in after-tax operating costs, mainly labor.
• The firm's marginal tax rate is 40 percent.

1. What is the net investment in the truck? (That is the net cash flow of year 0)?