Problem 1: Watson Manufacturing has an opportunity to invest $96,000 in a new machine. The new machine will result in cost savings of $25,000 in year 1, $25,000 in year 2, $25,000 in year 3, $25,000 in year 4, and $25,000 in year 5. The new machine will require a tune-up in year 3 costing $3,000. The salvage value of the machine will be $10,000 at the end of year 5. Watson's cost of capital is 10%. Create a table showing the cash flows in each year of the project and compute the NPV.

0	1	2	3	4	5

The NPV is: $_____________________Is the investment acceptable? ___________

BUDGETS
Johnson Company expects sales of 24,000 units in January, 26,000 units in February, and
28,000 units in March. The sales price per unit is $15. Create a sales budget.
Sales Budget	Jan	Feb	Mar	Total
Unit Sales
Price
Sales Revenue
Johnson wants to finish each month with 20% of the next month