Your company is considering a new project that will require $740,000 of new equipment at the start of the project. The equipment will have a depreciable life of 8 years and will be depreciated to a book value of $140,000 using straight-line depreciation. The cost of capital is 11 percent, and the firms tax rate is 30 percent.

Estimate the present value of the tax benefits from depreciation. (Round your answer to 2 decimal places.)

Present value

$

You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $18,500 to purchase and which will have OCF of $2,100 annually throughout the vehicles expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $28,000 to purchase and which will have OCF of $1,100 annually throughout that vehicles expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future.

If the business has a cost of capital of 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Scion's EAC	$
Toyota's EAC	$

KADS, Inc., has spent $420,000 on research to develop a new computer game. The firm is planning to spend $220,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $52,000. The machine has an expected life of three years, a $77,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $620,000 per year, with costs of $270,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $110,000 at the beginning of the project.

What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Year	0		1		2		3
FCF	$		$		$		$

You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $430 per unit and sales volume to be 1,200 units in year 1; 1,325 units in year 2; and 1,000 units in year 3. The project has a 3-year life. Variable costs amount to $240 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $156,000 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $32,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 30 percent and the required return on the project is 11 percent.

What change in NWC occurs at the end of year 1?

(increase/decrease) $