Olinick Corporation is considering a project that would require an investment of $364.000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.) $240,000 24,000 216,000 Sales Variable expenses Contribution margin Fixed expenses: Salaries Rente Depreciation Total fixed expenses Net operating income 42,000 55,000 50,000 147,000 $ 69,000 The scrap value of the project's assets at the end of the project would be $32,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.) Multiple Choice 3.1 years 5.3 years 38 years 2.7 years The manegernent of Ra Corporation is investigating automating a process. Old equipment, with a current selvege value of $27,000, would be replaced by a new machine. The new recruine would be purchased for $474,000 and would have a 6 yeer useful life and no salvage value By automating the process the company would save $163.000 per year in cash operating costs. The simple rate of retum on the investment is closest to ignore income taxes X (Round your answer to 1 decimal place.) ( 01:09:16 Mile Choice o 16.09 17.7% 3445 16.7% Welch Corporation is plenning an investment with the following cheracteristics ignore income texes. 12 6 years $80,000 30 06:15 Useful lite Yearly net cash inflow Salvage value Internal rate of return Required rate of return 175 133 Click here to view Exhibit 138-1 and Exhait 3H-2. to determine the appropriate discount factors) using the tables provided. The initial cost of the couipment is closest to Multiple VICA $400100 $287120 $297,470 Carrol be deler from the given information 14 Coache Corporation is considering a capital budgeting project that would require an investment of $340,000 in equipment with 4 year useful life and zero salvage value. The annual incremental sales would be $740,000 and the annual incremental cesh operating expenses would be $450,000. In addition, there would be a one-time renovation expense in yeer 3 of 541,000. The compery's income tax rate is 30%. The compeny uses streight-line depreciation on el equipment. The total cash flow nat of income taxes in year 3 8. 01:03:04 Multiple Choice $192.800 $239,000 $124.650 $165.650 Truskawski Corporation has provided the following information concerning a capital budgeting project: 15 130 303 After-tax discount rate Tax rate Expected life of the project Investment required in equipment Salvage value of equipment Annual sales Annual cash operating expenses 01:02:54 $164,000 $ $ 355,000 $ 130,000 The company uses straight-line depreciation on all equipment: the annual depreciation expense will be $41000. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting. Click here to view Exhibit 138-1 to determine the appropriate discount factors using leble. The not present value of the project is casest to: (Round intermediate calculations and final answer to the nearest dollar amount.) Multiple Choice 3515,200 $151,4 3504,95 $340 985
