Tsuki company is considering investing in a new equipment in relation to its 6- year project plan. The new equipment will cost the Corporation $2,160,000 which will be depreciated using the straight-line method over the life of the project. The salvage value of the equipment is $240,000 at the end of the life of the project. An old equipment is fully depreciated to its salvage value of $264,000. A third-party supplier offered to buy this old equipment for $300,000 on the replacement date.

The project is expected to generate additional sales of 60,000 units per year. The contribution margin per unit is $12. However, the projects fixed cost, not including depreciation is $156,000. The project requires additional investment in working capital amounting to $84,000. This amount is fully recoverable at the end of the life of the project. Tsuki company is subject to an income tax rate of 30%. Its cost of capital is 12%.

What is the net cost of investment in the new equipment?

a. $1,869,000 c. $1,870,000 b. $1,944,000 d. $1,954,000

In relation to the previous item, what is the annual cash inflow, net of income taxes form the investment?

a. $170,800 c. $294,800 b. $490,800 d. None

In relation to the previous item, what is the net present value of the investment? Round off the PVF to four decimal places.

a. $42,554.40 c. $121,584 b. $227,213.52 d.$2,182,013.52