Consider the following project: Net cash flow -225 Period Change in value (economic depreciation) Expected economic income 2 91.55 253.25 The internal rate of return is 17%. The NPV, assuming a 17% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not ro intermediate calculations. Round your answers to 2 decimal places.) Period 2

The capital recovery cost for the linear accelerator is $99,921. a. The annual equivalent operating and maintenance costs for the linear accelerator are: [Select] b. The annual equivalent cost for the linear accelerator is: [Select] [Select $125,997 $122,305 $127,843 $124,151 $120,459

A proposed cost-saving device has an installed cost of $610,000. It is in Class 8 (CCA rate = 20%) for CCA purposes. It will actually function for five years, at which time it will have no value. There are no working capital consequences from the Investment, and the tax rate is 35%. a. What must the pre-tax cost savings be for us to favour the Investment? We require an 10% return. (Hint: This one is a variation on the problem of setting a bid price.) (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings $ 94,000 b. Suppose the device will be worth $85,000 in salvage (before taxes). How does this change your answer? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings $80,769.23

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SGS Golf Academy is evaluating different golf practice equipment. The "Dimple-Max" equipment costs $149,000, has a 4-year life, and costs $9,300 per year to operate. The relevant discount rate is 14 percent. Assume that the straight-line depreciation method is used and that the equipment is fully depreciated to zero. Furthermore, assume the equipment has a salvage value of $21,500 at the end of the project’s life. The relevant tax rate is 22 percent. All cash flows occur at the end of the year. What is the EAC of this equipment? Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

The CFO of Axis Manufacturing is evaluating the introduction of a new product. The costs of a recently completed marketing study for the new product and the possible increase in the sales of a related product made by Axis are best described (respectively) as follows: a. Opportunity cost b. Depreciation cost c. Sunk cost

A project involved initial construction costs of $2.5 million. The annual rate of economic depreciation for that construction class is 0.008. The project is expected to terminate in 25 years. The expected annual rate of inflation is 0.025. a. Estimate the horizon value at time t=25 owing to the remaining value of this asset. b. If the real discount rate is 0.035, what is the present value of the horizon value from (a)?

A new drill press costs $12,000. It would potentially produce an additional $4,000 of revenue per year and have an operating expense of $1,200. What is the PW of the drill press if the new equipment is expected to last 8 years and i = 10%? Select one: a. $15,534 b. $19,345 c. $14,938 d. $21,735

CS 22  Economics