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Use the following data to answer Questions 1 through 14: MLK Co is a manufacturing company which is considering the purchase of a new equipment.
Use the following data to answer Questions 1 through 14: "MLK Co" is a manufacturing company which is considering the purchase of a new equipment. The below given summarizes all the information related to the equipment: -Equipment's price: $180,000 Shipping: $20,000 -Payment to find a good place to install the equipment: $30,000 - Useful Life : 4 years -Depreciation Method: MACRS - 3 year class -Total Revenues/ year: $100,000 - Operating costs (Excluding Depreciation)/year: $25,000 -Salvage Value: $10,000 - Increase in Current Asset: $23,000 -Increase in Current liabilities (Except N/P): $8,000 - WACC: 9% -Tax rate: 40% Note: The MACRS rates are 33%, 45%, 15%, and 7% respectively. 9. The after-tax Cash Flow for the 2nd year is: * A. $85,000 B. $111,000 C. $81,000 D. $86,400 E. None of the above 10. The after-tax Cash Flow for the 3rd year is: * A. $57,000 B. $58,800 C. $61,000 D. $87,000 O E. None of the above 11. The after-tax Cash Flow for the 4th year is: * A. $57,000 B. $40,000 C. $50,600 D. $51,440 O E. None of the above 12. The Book Value of the equipment at termination is: * A. $0 B. $10,000 C. $15,000 D. $25,000 E. None of the above 13. The Terminal Value (TV) is: * A. $25,000 B. $21,000 C. $10,000 O D. $70,000 E. None of the above 14. The NPV value of the project is: * A. $10,460 B. $13,418 C. $41,437 D. $49,258 E. None of the above
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