!) Which of the following should be included in the analysis of incremental cash flows?

a)Sunk costs

b)Externalities

c)Financing costs

d) Executive Compensation

2) Using MACRS, which of the following is not correct?

a)Depreciate to zero, subtracting out salvage value

b) It is important to know which asset class is appropriate (for tax purposes)

c) The initial cost of the asset being depreciated should be multiplied by the percentage given in the table

d) MACRS assumes that once you purchase the asset, you put it into effect six months later

3) For which of the following would you employ the sensitivity analysis method?

a)To calculate when the net present value of the project would be zero

b) To evaluate alternative pricing strategies

c) To measure the change in net present value if one of the assumptions changes

D) To evaluate strengths and weaknesses of a project

4) MACRS Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Depreciation Rate 20% 32% 19.2% 11.52% 11.52% 5.76%

A company invests $26644 in new machinery, which was depreciated using the five-year MACRS schedule shown above. If the company sold the machinery immediately after the end of year 3 for $9378, what is the after-tax salvage value from the sale, given a tax rate of 21%? Enter your answer in dollars and round to the nearest dollar.