Use the following data to answer Questions 1 through 14: Manigault Industries is considering an expansion project. The proposed project would have a 4-year life along with the following features: The necessary equipment is priced at $90,000. The engineers require a cost of $3,000 to install the equipment and $5,000 to train employees to use the equipment The equipment will be depreciated using MACRS 3 year class over 4 years using the following depreciation rates: 33% (year 1), 45% (year 2), 15% (year 3) and 7% (year 4). If the project is undertaken, at t = 0 the company will need to increase its inventories by $50,000 and its accounts payable by $30,000. The company will realize an additional $500,000 in sales over each of the next four years. The companys operating costs (excluding depreciation) will equal $200,000 a year. The companys tax rate is 40%. At t = 4, the equipment will be sold for $30,000. The weighted average cost of capital WACC is 10%.

1. The net working capital (NWC) equals: *

A. $50,000

B. $30,000

C. $80,000

D. $20,000

E. None of the above

2. The base price of the equipment equals: *

A. $93,000

B. $98,000

C. $200,000

D. $500,000

E. None of the above

3. What is the net cost of the equipment for capital budgeting purposes? *

A. $113,000

B. $45,200

C. $30,000

D. $118,000

E. None of the above

4. The depreciation expense for the 1st year is: *

A. $30,000

B. $30,690

C. $32,340

D. $0

E. None of the above

5. The depreciation expense for the 2nd year is: *

A. $25,000

B. $50,850

C. $41,850

D. $44,100

E. None of the above

6. The depreciation expense for the 3rd year is: *

A. $28,250

B. $20,750

C. $13,950

D. $14,700

E. None of the above

7. The depreciation expense for the 4th year is: *

A. $6,510

B. $6,860

C. $2,100

D. $5,000

E. None of the above

8. The after-tax Cash Flow for the 1st year is: *

A. $500,000

B. $200,000

C. $192,936

D. $192,276

E. None of the above

9. The after-tax Cash Flow for the 2nd year is: *

A. $196,740

B. $153,540

C. $200,000

D. $30,000

E. None of the above

10. The after-tax Cash Flow for the 3rd year is: *

A. $286,000

B. $20,000

C. $185,580

D. $185,880

E. None of the above

11. The after-tax Cash Flow for the 4th year is: *

A. $182,604

B. $182,744

C. $176,094

D. $117,396

E. None of the above

12. The Book Value of the equipment at termination is: *

A. $30,050

B. $10,500

C. $6,510

D. $0

E. None of the above

13. The Terminal Value (TV) is: *

A. $38,000

B. $61,050

C. $45,485

D. $35,636

E. None of the above

14. The NPV value of the project is: *

A. $514,496

B. $272,500

C. - $296,235

D. -$300,250

E. None of the above