Overarmour Corp. is in the evaluation process for the acquisition of a new machine with 6 years productive life (5 years MACRS). The new machine with a total cost of $90,000 will produce earnings before depreciation and taxes of $25,000 during years 1 - 3 and $20 during years 4 - 6. Overarmour cost of capital is 12.5% and the corporate tax rate is 35%. How much will be the depreciation expense for year 1 $29,970 $18,000 $28,800 $12,870 $9,000 none of the above Overarmour Corp. is in the evaluation process for the acquisition of a new machine with 6 years productive life (5 years MACRS). The new machine with a total cost of $90,000 will produce earnings before depreciation and taxes of $25,000 during years 1 - 3 and $20 during years 4 - 6. Overarmour cost of capital is 12.5% and the corporate tax rate is 35%. How much will be the depreciation expense for year 3 $17,280 $15,750 $13,320 $12,960 $10,350 Overarmour Corp. is in the evaluation process for the acquisition of a new machine with 6 years productive life (5 years MACRS). The new machine with a total cost of $90,000 will produce earnings before depreciation and taxes of $25,000 during years 1 - 3 and $20 during years 4 - 6. Overarmour cost of capital is 12.5% and the corporate tax rate is 35%. How much will be cash flows for year 2 $25,000 $27,660 $28,800 $26,330 none of the above Overarmour Corp. is in the evaluation process for the acquisition of a new machine with 6 years productive life (5 years MACRS). The new machine with a total cost of $90,000 will produce earnings before depreciation and taxes of $25,000 during years 1 - 3 and $20 during years 4 - 6. Overarmour cost of capital is 12.5% and the corporate tax rate is 35%. What is the payback period of the new machine 4 years 5 years 4.51 years 4.13 years none of the above Overarmour Corp. is in the evaluation process for the acquisition of a new machine with 6 years productive life (5 years MACRS). The new machine with a total cost of $90,000 will produce earnings before depreciation and taxes of $25,000 during years 1 - 3 and $20 during years 4 - 6. Overarmour cost of capital is 12.5% and the corporate tax rate is 35%. What is the Net Present Value of the new machine $83,424 $90,000 $6,576 ($6,576) none of the above Overarmour Corp. is in the evaluation process for the acquisition of a new machine with 6 years productive life (5 years MACRS). The new machine with a total cost of $90,000 will produce earnings before depreciation and taxes of $25,000 during years 1 - 3 and $20 during years 4 - 6. Overarmour cost of capital is 12.5% and the corporate tax rate is 35%. Is the new machine a good investment? yes no The Capital Budgeting technique (method) that emphasizes liquidity is Payback method Net present value profile Internal Rate of Return O Net Present Value all of the above KT Tools is considering the following 3 projects (the data is the cash flow for each project) yr A B 26.00 21.00 18.00 2 17.00 22.00 26.00 If the initial investment for each project is $30, which project is better at lower discount rate (for example lower than 4%) 1 project A project B project C not enough data to
