MLK Co is a manufacturing company which is considering the purchase of a new equipment. The below given summarizes all the information related to the equipment: -Equipments price: $180,000 -Shipping: $20,000 -Payment to find a good place to install the equipment: $30,000 -Useful Life : 4 years -Depreciation Method: MACRS 3 year class -Total Revenues/ year: $100,000 -Operating costs (Excluding Depreciation)/year: $25,000 -Salvage Value: $10,000 -Increase in Current Asset: $23,000 -Increase in Current liabilities (Except N/P): $8,000 -WACC: 9% -Tax rate: 40% Note: The MACRS rates are 33%, 45%, 15%, and 7% respectively.

1. The net working capital (NWC) equals: *

A. $8,000

B. $15,000

C. $31,000

D. $23,000

E. None of the above

2. The base price of the equipment equals: *

A. $200,000

B. $160,000

C. $180,000

D. $230,000

E. None of the above

3. What is the net cost of the equipment for capital budgeting purposes? *

A. $195,000

B. $223,000

C. $208,000

D. $215,000

E. None of the above

4. The depreciation expense for the 1st year is: *

A. $40,000

B. $66,000

C. $75,900

D. $90,000

E. None of the above

5. The depreciation expense for the 2nd year is: *

A. $103,500

B. $66,000

C. $80,000

D. $90,000

E. None of the above

6. The depreciation expense for the 3rd year is: *

A. $30,000

B. $34,500

C. $66,000

D. $14,000

E. None of the above

7. The depreciation expense for the 4th year is: *

A. $30,000

B. $7,000

C. $14,000

D. $16,100

E. None of the above

8. The after-tax Cash Flow for the 1st year is: *

A. $65,000

B. $71,400

C. $111,000

D. $75,360

E. None of the above

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

A. $85,000

B. $111,000

C. $81,000

D. $86,400

E. None of the above

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

A. $57,000

B. $58,800

C. $61,000

D. $87,000

E. None of the above

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

A. $57,000

B. $40,000

C. $50,600

D. $51,440

E. None of the above

12. The Book Value of the equipment at termination is: *

A. $0

B. $10,000

C. $15,000

D. $25,000

E. None of the above

13. The Terminal Value (TV) is: *

A. $25,000

B. $21,000

C. $10,000

D. $70,000

E. None of the above

14. The NPV value of the project is: *

A. $10,460

B. $13,418

C. $41,437

D. $49,258

E. None of the above