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