Question 7 (2 points) Sam Evans currently owns a Bagel store. He thinks that the wood oven should be replaced by a modern gas oven, which would reduce costs by $36,500 per year. He only plans to be in business for another two years. The current oven was purchased thirty years ago for $20,000. It could be sold today for $5,000 and will be worth $3,000 in two years. A new oven costs $105,000 today and could be sold for $85000 in two years. Ovens are in class 8 with a 20% depreciation rate. Assume that investment cash flows occur immediately, and that sales and production costs occur at the end of the year. The forecasted incremental operating cash flows will be $27,225 in Year 1 and $30,025 in Year 2. The cost of capital is 9% and the tax rate is 35% What is the NPV for the proposed acquisition? Make your answer accurate to the nearest integer number without any symbol (\$,\%). That is, if your answer is 1234.56, write 1235. Your Answer: Suppose Super Pumps Inc. wants to expand production of its new solar-powered bilge pumps. It projects the EBIT of $3 million if the expansion is successful. Assume the projected total funds needed for this expansion are $4 million. Also assume Super Pumps could finance the $4 million by selling bonds with a pretax interest cost of 7% or by selling equity at $14 per share. There are one million shares outstanding, an initial debt of $6 million, and the firm's tax rate is 21%. What is the EBIT-EPS indifference point? Write your answer in millions, to two decimal places. That is, if your answer is $8,340,500,000, write 8340.50 . Your