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The Becker Company is interested in buying a piece of equipment that it needs. The following data have been assembled concerning this equipment: Cost of

The Becker Company is interested in buying a piece of equipment that it needs. The following data have been assembled concerning this equipment:

Cost of required equipment... $250,000

Working capital required... $100,000

Annual operating cash inflows... $80,000

Cash repair at end of 4 years... $40,000

Salvage value at end of 6 years... $90,000

This equipment is expected to have a useul life of 6 years. At the end of the sixth year the working capiral would be released for use elsewhere. The company's discount rate is 10%

1. The present value of all future operating cash inflows is closest to:

A. $480,000

B. $452,300

C. $348,400

D. $278,700

2. The present value of the net flows (all cahs inflows less all cash outflows) occuring during year 4 is:

A. $40,000

B. $27,320

C.$54,640

D. $42,790

3. The present value of the net cash flows (all cahs inflows less all cash outflows) occuring during year 6 is:

A. $270,000

B. $195,900

C. $107,200

D. $152,300

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