(page 1 of 10) 20-43255.202040-Managerial Finance | Gateway Communications is considering a project with an initial fixed asset cost of $2,872,000 which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $300,000. The project will not directly produce any sales but will reduce operating costs by $714,000 a year. The tax rate is 21 percent. The project will require $52,000 of inventory which will be recouped when the project ends. What is the net present value at the required rate of return of 16 percent? Select one: a $68,019.24 b. $152,108.10 3. $ 101,414.14 d. $70,475.57 e. $159,243.47 Follow e-LIS page 2 of 10) 20-43255.202040-Managerial Finance You are considering the purchase of a new machine. Your analysis includes the evaluation of two machines that have differing initial and ongoing costs and differing lives. Whichever machine is purchased will be replaced at the end of its useful life. You should select the machine that has the an Select one: a. Shortest life. b. Lowest NPV. 0 C Lowest equivalent annual cost. d. Longest life e. Highest NPV. page Follow e-LIS -43255.202040-Managerial Finance A project has initial costs of $212,000, and cash inflows of $67,800, $78,300 and $99,600 for years 1 to 3, respectively. The required rate of return is 12 percent. What is the profitability index? Should you accept or reject the project? act one a. 1.02; accept b. 1.02, reject c.91; reject d. 91; accept e. 1.07 accept Follow e-LIS You are considering two mutually exclusive projects. Project A has cash flows of $78,000, $32, 600, $45,900, and $53,400 for years 0 to 3, respectively, Project B has cash flows of $85,000, $14,700, 521,200, and $89,800 for years 0 to 3, respectively. Project A has a required return of 9 percent while Project B's required return is 11 percent, which project(s), if either should you accept based on net present value? Select one: a. Reject both projects b. Reject Project A and accept Project B c.accept Either one, but not both d. Accept Project A and reject Project B e. Accept both projects page Follow e-LIS