Manigault Industries is considering an expansion project. The proposed project would have a 4-year life along with the following features: The necessary equipment is priced at $90,000. The engineers require a cost of $3,000 to install the equipment and $5,000 to train employees to use the equipment The equipment will be depreciated using MACRS 3 year class over 4 years using the following depreciation rates: 33% (year 1), 45% (year 2), 15% (year 3) and 7% (year 4). If the project is undertaken, at t = 0 the company will need to increase its inventories by $50,000 and its accounts payable by $30,000. The company will realize an additional $500,000 in sales over each of the next four years. The companys operating costs (excluding depreciation) will equal $200,000 a year. The companys tax rate is 40%. At t = 4, the equipment will be sold for $30,000. The weighted average cost of capital WACC is 10%.

1- The after-tax Cash Flow for the 2nd year is: *

A. $196,740

B. $153,540

C. $200,000

D. $30,000

E. None of the above

2- The after-tax Cash Flow for the 3rd year is: *

A. $286,000

B. $20,000

C. $185,580

D. $185,880

E. None of the above

3- The after-tax Cash Flow for the 4th year is: *

A. $182,604

B. $182,744

C. $176,094

D. $117,396

E. None of the above

4- The Book Value of the equipment at termination is: *

A. $30,050

B. $10,500

C. $6,510

D. $0

E. None of the above

5- The Terminal Value (TV) is: *

A. $38,000

B. $61,050

C. $45,485

D. $35,636

E. None of the above

6- The NPV value of the project is: *

A. $514,496

B. $272,500

C. - $296,235

D. -$300,250

E. None of the above