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. 3. What is the net cost of the equipment for capital budgeting purposes? O A. $195,000 B. $223,000 C. $208,000 O D. $215,000 E. None of the above 4. The depreciation expense for the 1st year is: * A. $40,000 B. $66,000 C. $75,900 D. $90,000 O E. None of the above 5. The depreciation expense for the 2nd year is: * A. $103,500 O B. $66,000 C. $80,000 D. $90,000 O E. None of the above 6. The depreciation expense for the 3rd year is:* A. $30,000 B. $34,500 C. $66,000 D. $14,000 O E. None of the above * 7. The depreciation expense for the 4th year is: A. $30,000 B. $7,000 C. $14,000 D. $16,100 E. None of the above 8. The after-tax Cash Flow for the 1st year is: * O A. $65,000 B. $71,400 C. $111,000 D. $75,360 E. None of the above 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 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. 3. What is the net cost of the equipment for capital budgeting purposes? O A. $195,000 B. $223,000 C. $208,000 O D. $215,000 E. None of the above 4. The depreciation expense for the 1st year is: * A. $40,000 B. $66,000 C. $75,900 D. $90,000 O E. None of the above 5. The depreciation expense for the 2nd year is: * A. $103,500 O B. $66,000 C. $80,000 D. $90,000 O E. None of the above 6. The depreciation expense for the 3rd year is:* A. $30,000 B. $34,500 C. $66,000 D. $14,000 O E. None of the above * 7. The depreciation expense for the 4th year is: A. $30,000 B. $7,000 C. $14,000 D. $16,100 E. None of the above 8. The after-tax Cash Flow for the 1st year is: * O A. $65,000 B. $71,400 C. $111,000 D. $75,360 E. None of the above 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
