Question 1 BrummittCorporation is evaluating a new 4-year project. The equipment necessary for the project will cost $2,650,000 and can be sold for $307,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 21 percent. What is the aftertax salvage value of the equipment?

$338,693

$252,974

$275,307

$199,550

$307,000

Based on the NPV rule, an investment is acceptable if the NPV exceeds zero. It should be rejected otherwise.

True

False

Question 3

A project with an initial cost of $25,150 is expected to generate cash flows of $6,000,$8,100, $8,800, $7,700, and $6,800 over each of the next five years, respectively. What is the project's payback period?

3.66 years 3.29 years 3.50 years 3.41 years 3.74 years