Homer corp is considering the purchase of a new piece of

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Reference no: EM13571437

1.Homer Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $188,000. The equipment will have an initial cost of $416,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $86,000, what is the annual net cash flow?

A) $102,000

B) $122,000

C) $ 254,000

D) $274,000

2.Cortland Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flows of $183,000. The equipment will have an initial cost of $452,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $92,000, what is the annual net income? Ignore income taxes.

A) $111,000

B) $91,000

C) $255,000

D) $275,000

Reference no: EM13571437

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