The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 7 years. The company uses a discount rate of 12% in its capital budgeting. The net present value of the investment, excluding the annual cash inflow, is-$403,814. To the nearest whole dollar how large would the annual cash inflow have to be to make the investment in the equipment financially attractive? (Ignore income taxes.) Click here to view Exhibit 13B-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using the tables provided Multiple Choice $88.478 $403,814 $48,458 $57,688 Charlie has a useful costs $4,050 per year to operate. Also, because of increased capacity, an additional 21,000 donuts a year can be produced. The company makes a contribution margin of $0.10 per donut. The old machine can be sold for $8,000 and Corporation is considering buying a new donut maker. This machine will replace an old donut maker that still life of 6 years. The new machine will cost $3,700 a year to operate, as opposed to the old machine, which new machine costs $31,000. The incremental annual net cash inflows provided by the new machine would be (gnore income taxes.): Multiple Choice $2,100 $5,900 $2,450 $350 Denny Corporation is considering replacing a technologically obsolete machine witha controlled machine. The new machine would cost $200,000 and would have a sixteen-year useful life. Unfortunately new state-of-the-art numerically the new maintain, but would save $62,000 per year in labor and other $20,000. The simple rate of return on the new machine is closest to (Ignore income ta machine would have no salvage value. The new machine would cost $30,000 per year to operate and costs. The old machine can be sold now for scrap for Multiple Choice 21.67% 975% 31.00% 10.83% Perkins Corporation is considering several investment proposals, as shown below Investment Proposal Investment required Present value of future net cash flows $108,000 $135,000 $ 81,000 $101,250 $129,600 $202,500 $113,400 $204,000 If the project profitability index is used, the ranking of the projects from most to least profitable would be: Multiple Choice D, B, C, A B, D, C, A A, C, B, D B, D, A, C The management of Byrge Corporation is investigating buying a smali used aircraft to use in making airbone inspections of its above-ground pipelines. The aircraft would have a useful life of 6 years. The company uses a discount rate of 20% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is- $474,840. (Ignore income taxes) Click here to view Exhibit 138.1 and Exhibit 138:2, to determine the appropriate discount factors) using the tables provided How large would the annual intangible benefit have to be to make the investment in the aircraft financialy attractive? Round your intermediate calculations and final answer to the nearest whole dollar amount.) Multiple Choice $79,140 $474.840 $142,766 $94.968
