Question 28

Barton Company can acquire a $720,000 machine now that will benefit the firm over the next 5 years. FV of 1 (i = 9%, n = 5): 1.539 FV of a series of $1 cash flows (i = 9%, n = 5): 5.985 PV of $1 (1 = 9%; n = 5) : 0. 650 PV of a series of $1 cash flows (i = 9%, n = 5): 3.898 Annual savings in cash operating costs are expected to total $170,000. If the hurdle rate is 9%, the investment's net present value is:A machine Is expected to produce Increases In cash operating costs of $230,000 for the next six years. FV of 1 (i = 10%, n = 6): 1.772 FV of a series of $1 cash flows (1 = 10%, n = 6): 7. 716 PV of $1 (i = 10%; n = 6) : 0.564 PV of a series of $1 cash flows (i = 10%, n = 6): 4.355 If the company has a(n) 10% after-tax hurdle rate and is subject to a 30% income tax rate. the correct discounted net cash flow would be:Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Regular Super Total Units 10,080 3,080 13,080 Sales revenue $260,000 $645,908 $905, 090 Less: Cost of goods sold 196,060 375,080 571,080 Gross Margin $ 64,000 $270,008 $334,080 Less: Selling expenses 64,080 136,008 200, 080 Operating income (loss) $ e $134,060 $134,080 Fixed manufacturing costs included in cost of goods sold amount to $4 per unit for Regular and $20 per unit for Super. Variable selling expenses are $5 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed. If Omar Industries eliminates Regular and uses the available capacity to produce and sell an additional 1,700 units of Super, what would be the impact on operating Income