Nolan Weller is considering investing $70,000 to start a bookstore Nolan expects to receive cash inflows from the bookstore of $15,000 at the end of each year for the next six years At the end of the sixth year, Nolan believes he can sell the business for $85,000 cash Using a 15 minimum required rate of return, what is the net present value of the bookstore investment (ignore taxes) a $56,700 b $36,050 c $70,000 d $23,480 Anthony operates a part time auto repair service He estimates that a new diagnostic computer system will result in increased cash inflows of $18,000 in year 1, $24,000 in year 2, and $30,000 in year 3 If Anthony requires a return of 14 on all investment projects, then the most he would be willing to pay for the new computer system would be (ignore taxes) a $57,294 b $56,141 c $54,492 d $52,916 The Laws company has decided to buy a machine costing $200,000 Estimated cash savings from using the new machine amount to $41,675 per year The machine will have no salvage value at the end of its useful life of eight years The machine's internal rate of return is closest to a 15 b 13 c 14 d 16 A new machine costing $832,000 will yield cash savings of $155,000 each year for seven years In addition, it is anticipated that the new machine will increase productivity and that the company will experience an increase in contribution margin as a result What annual dollar inflow from increased contribution margin would the company have to experience to make the machine an acceptable investment if the minimum desired rate of return is 15 a $64,000 b $86,000 c $45,000 d $35,000 Jacobs Co is considering buying several small tools at a cost of $15,000 The new tools will save the company $5,500 in manufacturing costs each year and are expected to last 4 years Assume salvage is $3,000 and the tax rate is 34 Jacobs uses the MACRS method to compute depreciation for tax purposes The MACRS depreciation rates are 33 3 in year 1, 44 5 in year 2, 14 8 in year 3, and 7 4 in year 4 Using a minimum desired after tax rate of return of 12 , the net present value of this investment is (include the effect of taxes and round present values to the nearest cent) a ($1,064 78) b $1,533 42 c ($1,107 47) d $1,386 41

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Nolan Weller is considering investing $70,000 to start a bookstore. Nolan expects to receive cash inflows from the bookstore of $15,000 at the end of

Nolan Weller is considering investing $70,000 to start a bookstore. Nolan expects to receive cash inflows from the bookstore of $15,000 at the end of each year for the next six years. At the end of the sixth year, Nolan believes he can sell the business for $85,000 cash. Using a 15% minimum required rate of return, what is the net present value of the bookstore investment? (ignore taxes)

		a. $56,700
		b. $36,050
		c. $70,000
		d. $23,480

Anthony operates a part-time auto repair service. He estimates that a new diagnostic computer system will result in increased cash inflows of $18,000 in year 1, $24,000 in year 2, and $30,000 in year 3. If Anthony requires a return of 14% on all investment projects, then the most he would be willing to pay for the new computer system would be: (ignore taxes)

		a. $57,294
		b. $56,141
		c. $54,492
		d. $52,916

The Laws company has decided to buy a machine costing $200,000. Estimated cash savings from using the new machine amount to $41,675 per year. The machine will have no salvage value at the end of its useful life of eight years. The machine's internal rate of return is closest to:

		a. 15%
		b. 13%
		c. 14%
		d. 16%

A new machine costing $832,000 will yield cash savings of $155,000 each year for seven years. In addition, it is anticipated that the new machine will increase productivity and that the company will experience an increase in contribution margin as a result. What annual dollar inflow from increased contribution margin would the company have to experience to make the machine an acceptable investment if the minimum desired rate of return is 15%?

		a. $64,000
		b. $86,000
		c. $45,000
		d. $35,000

Jacobs Co. is considering buying several small tools at a cost of $15,000. The new tools will save the company $5,500 in manufacturing costs each year and are expected to last 4 years. Assume salvage is $3,000 and the tax rate is 34%. Jacobs uses the MACRS method to compute depreciation for tax purposes. The MACRS depreciation rates are: 33.3% in year 1, 44.5% in year 2, 14.8% in year 3, and 7.4% in year 4. Using a minimum desired after-tax rate of return of 12%, the net present value of this investment is: (include the effect of taxes and round present values to the nearest cent)