1. Winslow Motors purchased $225,000 of MACRS 5-year property. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. The tax rate is 34 percent. If the firm sells the asset after five years for $10,000, what will be the aftertax cash flow from the sale?

A- $8,993.60

B- $8,880.20

C- $11,006.40

D- $7,770.40

E- $12,892.00

2. A project is expected to create operating cash flows of $26,500 a year for four years. The initial cost of the fixed assets is $62,000. These assets will be worthless at the end of the project. An additional $3,000 of net working capital will be required throughout the life of the project. What is the project's net present value if the required rate of return is 12 percent?

A- $19,208.11

B- $14,028.18

C- $15,306.09

D- $17,396.31

E- $21,954.17

3. Tool Makers manufactures equipment for use by other firms. The initial cost of one customized machine is $850,000 with an annual operating cost of $10,000, and a life of 3 years. The machine will be replaced at the end of its life. What is the equivalent annual cost of this machine if the required rate of return is 15 percent and we ignore taxes?

A- $375,797.41

B- $340,008.02

C- $382,280.42

D- $347,647.78

E- $351,610.29

4. The Boat Works currently produces boat sails and is considering expanding its operations to include awnings. The expansion would require the use of land the firm purchased three years ago at a cost of $197,000 that is currently valued at $209,500. The expansion could use some equipment that is currently sitting idle if $7,500 of modifications were made to it. The equipment originally cost $387,500 five years ago, has a current book value of $132,700, and a current market value of $139,000. Other capital purchases costing $520,000 will also be required. What is the value of the opportunity costs that should be included in the initial cash flow for the expansion project?

A- $425,000

B- $485,000

C- $329,700

D- $348,500

E- $537,200

Choose the right answer