Working capital needed for a new project is treated:

a$.$ as a cash inflow now and as a cash outflow when the project ends.

b$.$ as a cash outflow now and as a cash inflow when the project ends.

c$.$ only as a cash outflow now.

Which of the following is not an example of a cash outflow for a proposed machine purchase?

a$.$ Salvage value at the end of its useful life

b$.$ Initial investment $($cost$)$ of the machine now

c$.$ Annual operating costs of the machine

d$.$ Repairs and maintenance to be made on the machine during its life

Freestone Company is considering buying Machine $Y$ to replace Machine X$.$ Both machines have the same remaining useful life and will perform the same tasks. However, it is expected that $Y$ will waste less direct materials than does $x.$ If $Y$ is purchased, $x$ will be sold on the open market. For this decision problem, which of the following factors is $($are$)$ relevant?

I. Original cost of Machine $x$

II$.$ Current market value of Machine $x$

III. Cost to purchase Machine Y

IV$.$ Cost of direct materials used by each machine

a$.$ Only I, III, and IV

b$.$ Only II$,$ III, and IV

c$.$ Only I and III

d$.$ I, II$,$ III, and IV are all relevant

Joe and his sister Patty are considering investing $$6,000$ to start a used book business. They expect to receive cash inflows of $$1,000$ each year for the next four years from the business. At the end of the fourth year, they expect to be able to sell the business for $$10,000$ cash. What is the net present value of the book business investment if Joe and Patty want to earn at least a $12\%$ return from it$?($Ignore taxes$)$

a$.$ $$3,037$

c$.$ $$3,397$

b$.$ $$6,360$

d$.$ $$2,904$

Kern Co$.$ is planning to invest in a two$-$year project that is expected to yield cash flows from operations of $$50,000$ in the first year and $$80,000$ in the second year. Kern requires a return of $14$ percent on all investment projects. The maximum that Kern should invest in this project is: $($Ignore taxes$)$

a$.$ $$130,000.$

c$.$ $$120,160.$

b$.$ $$105,370.$

d$.$ $$161,000.$

If the internal rate of return is equal to the minimum required rate of return used to compute the net present value of a proposed machine purchase, then the net present value will be:

a$.$ positive.

c$.$ zero.

b$.$ negative.

d$.$ unknown.

The Valentine Company has decided to buy a machine costing $$14,750.$ Estimated cash savings from using the new machine amount to $$4,500$ per year. The machine will have no salvage value at the end of its useful life of five years. The machine's internal rate of return is closest to:

a$.10\%.$

c$.14\%.$

b$.12\%.$

d$.16\%.$