Q.1 Citrus Enterprises is upgrading its fruit washing/separating machine. Citrus Enterprises has narrowed the decision down to two machines: Machine A and Machine B. Pertinent information about each machine includes: (8 Marks) Machine A Machine B Investment $450,000 $650,000 Useful life (years) 10 10 Estimated annual net cash inflows for useful life $75,000 $120,000 Residual value $25,000 $35,000 Depreciation method straight-line straight-line Required rate of return 10% 12% Present Value of $1 Period s 10% 12% 9 0.424 0.361 10 0.386 0.322 11 0.350 0.287 Present Value of Annuity of $1 Period s 10% 12% 9 5.759 5.328 10 6.145 5.650 11 6.495 5.938 Required: a. Calculate the net present value of Machine A. b. Calculate the net present value of Machine B. c. Using the net present value method, which machine should the company select if it can select only one investment?

Q2. Hoffman Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections for the first five months of the upcoming year show the estimated unit sales of the planters each month to be as follows: (8 Marks) Number of planters to be sold January............................................................................... 3,000 February............................................................................. 3,200 March................................................................................. 3,100 April.................................................................................... 4,200 May..................................................................................... 4,000 7 | Page Inventory at the start of the year was 750 planters. The desired inventory of planters at the end of each month in the upcoming year should be equal to 25% of the following month's budgeted sales. Each planter requires two pounds of polypropylene (a type of plastic). The company wants to have 20% of the polypropylene required for next month's production on hand at the end of each month. The polypropylene costs $0.20 per pound. Requirements a. Prepare a production budget for each month in the first quarter of the year, including production in units for each month and for the quarter. b. Prepare a direct materials budget for the polypropylene for each month in the first quarter of the year, including the pounds of polypropylene required and the total cost of the polypropylene to be purchased