The Valentine Company has decided to buy a machine costing $20,000. Estimated cash savings from using the new machine amount to $5,000 per year. The machine will have no salvage value at the end of its useful life of six years. The machine's internal rate of return is closest to: (Ignore income taxes.) a.11% b.12% c.13% d.14%

9. Lt. Dan Corporation invested S$80,000 in a manufacturing equipment. The salvage value of the asset is expected to be $0. The company is expected to add $9,600 per year to the net income. Using the original cost of the asset, the unadjusted rate of return on the investment will be? Hint: If the problem does not give you enough information to determine the net values, keep your calculations simple!

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2. Super Apparel wants to replace an old machine with a new one. The new machine would increase annual revenue by $200,000 and annual operating expenses by $80,000. The new machine would cost $400,000. The estimated useful life of the machine is 10 years with zero salvage value. i. Compute Accounting Rate of Return (ARR) of the machine using above information. ii. Should Super Apparel purchase the machine if management wants an Accounting Rate of Return of 19% on all capital investments? Hint: Use Average Income or Profit after deducting tax, depreciation, and operating expenses.

6. A drill press costs $30,000 and is expected to have a 10 year life. The drill press will be depreciated on a straight-line basis over 10 years to a zero estimated salvage value. This machine is expected to reduce the firm's cash operating costs by $4,500 per year. If the firm is in the 40 percent marginal tax bracket, determine the annual net cash flows generated by the drill press.

A mini-mart needs a new freezer and the initial investment will cost $310,000. Incremental revenues, including cost savings, are $198,000, and incremental expenses, including depreciation, are $125,000. There is no salvage value. What is the accounting rate of return (ARR)? How much must be invested now to receive $30,000 for 10 years if the first $30,000 is received one year from now and the rate is 8%?

(Ignore income taxes in this problem.) Your Company uses a discount rate of 10%. The company has an opportunity to buy a machine now for $38,000 that will yield cash inflows of $10,000 per year for each of the next five years. The machine would have no salvage value. The net present value of this machine to the nearest whole dollar is: If the NPV is negative, enter your number with a – in front. Otherwise, just enter the number.

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