The ABC company is considering purchasing a machine that costs $280,000 and expected to yield $200,000 per year before taxes. The company has to borrow $80,000 which have to be repaid in two years at i=10%. The cost of operating and maintaining the machine is $40,000 per year. The machine will be needed for two years and can be sold at the end of the second year for $120,000. For depreciation purposes the straight-line depreciation method with no half-year convention applies. Find the missing values in the following tables in order to determine if this was a good investment at MARR of 14%. The company’s income tax is 40%. Your decision should be based on the PW criterion.                                                                                                         INCOME STATEMENT End of Year:          0         1          2 Revenue:     200,000   200,000 Expenses           Operating Costs:      40,000    40,000     Depreciation:         - - -      ?     - - -         ?      Debt Interest         - - -      ?     4191 Taxable Income:         - - -      ?     75809 Tax: (40%)       28800     30324 Net Income:       43200      - - -         ?                                       CASH FLOW STATEMENT     End of Year         0         1          2 Operating Activities:            Net Income:       43200       - - -        ?      Depreciation:       80000     80000 Investment Activities:            Machine: - 280,000          Salvage Value:        120,000      Gains Tax:           - - -        ? Financing Activities:            Borrowed Money:    80,000          Principal Repayment:        - - -       ?     - 41905 Net Cash Flow:     - - -       ?      85104       - - -        ? Present Worth =        ……………………………………………                    ?   Decision:    ……………………………………………………………………….     ?

A new machine costing $150,000 is expected to save the McKaig Brick Company $11,000 per year for 5 years before depreciation and taxes. The machine will be depreciated on a straight-line basis for a 5-year period to an estimated salvage value of $0. The firm’s marginal tax rate is 40 percent. What are the annual net cash flows associated with the purchase of this machine? Round your answer to the nearest dollar. $   Compute the net investment (NINV) for this project. Round your answer to the nearest dollar. $

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Van Nuys Company is considering the purchase of a new machine which will cost $7.370. The machine will provide revenues of $4,000 per year. The cash operating costs will be $2,000 per year. The new machine will have a useful life of six years. The company's cost of capital is 12 percent. Ignore income taxes. Should the company buy the new machine? Yes, because NPV=0 and IRR0 and IRR>Cost of Capital No, because NPV>0 and IRR0 and IRR>Cost of Capital O Yes, because NPV = IRR Question 4

The initial cost of one customized machine is $675,000 with an annual operating cost of $14,800, and a life of 4 years. The machine will be worthless and replaced at the end of its life. What is the equivalent annual cost of this machine if the required rate of return is 14.5 percent and we ignore taxes? USING EXCEL FORMULAS

A corporation is considering purchasing a machine that will save $150,000 per year before taxes. The cost of operating the machine (including maintenance) is $30,000 per year. The machine will be needed for five years, after which it will have a zero salvage value. MACRS depreciation will be used, assuming a three-year class life. The marginal income tax rate is 25%. If the firm wants 15% return on investment after taxes, how much can it afford to pay for this machine? Click the icon to view the MACRS depreciation schedules Click the icon to view the interest factors for discrete compounding when /- 15% per year. If the firm wants 15% return on investment after taxes, it can afford to pay thousand for this machine. (Round to one decimal place.)

Sauer Food Company has decided to buy a new computer system with an expected life of three years. The cost is $290,000. The company can borrow $290,000 for three years at 11 percent annual interest or for one year at 9 percent annual interest. Assume interest is paid in full at the end of each year. a. How much would Sauer Food Company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 9 percent rate? Compare this to the 11 percent three-year loan. 9 percent loan 11 percent loan Interest savings Interest b. What if interest rates on the 9 percent loan go up to 14 percent in year 2 and 17 percent in year 3? What would be the total interest cost compared to the 11 percent, three-year loan? Fixed-rate 11% loan Variable-rate loan Additional interest cost Interest

Green Power Company is considering acquiring a new machine that will last 14 years and it can be purchased right now for 116,319 dollars; maintenance will cost 23,444 dollars the first year, increasing by 6,434 dollars per year thereafter (e.g. maintenance at the end of year two is equal to 23,444 plus 6,434 dollars). If the interest rate is 7% per year, compounded annually, how much money should the company set aside now to purchase and provide for the future maintenance of this machine (NPV)? (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)

You are evaluating a proposed acquisition of a new machine costing $50,000. While the machine is expected to last for 5 years, it falls into the MACRS 3-year class. Purchase of the machine would require an increase of net operating working capital of $2,000. The machine would increase the firm's revenue by $15,000 per year and its operating costs by $7,000 per year. The firm's marginal tax rate is 30 percent, and the project's cost of capital is 14 percent. What is the operating cash flow in Year 1? MACRS 3-year schedule is as follows: 33%, 45%, 15%, and 7% for years 1 to 4, respectively.   Question 11 options:   $10,550   $10,720   $10,940   $11,180   $11,370   $11,670

A company is considering the purchase of new testing equipment that is expected to produce 8000 profit during the first year of operation. The amount will decrease by 500 per year for each additional year of ownership. The equipment cost 20000 and will have a salvage value of 3000 after 8 years of use. The minimum attractive rate of return is 18%. You are required to adivice the company whether they will go ahead with the purchase