Reference no: EM131889779

1. "The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders. The following financial information is available. - Without the project, the company expects to have a taxable income of $425,000 each year from its regular business over the next three years. - With the three-year project, the purchase of a new set of machine tools at a cost of $58,000 is required. The equipment falls into the MACRS three-year class. The tools will be sold for $16,000 at the end of project life. The project will be bringing in additional annual revenue of $75,000, but it is expected to incur additional annual operation of $16,000. What are the gains tax it pays at the end of year 3 if the tax rate is 34%?"

2."An industrial engineer proposed the purchase of an RFID Fixed-Asset Tracking System for the company's warehouse and weave rooms. The engineer felt that the purchase would provide a better system of locating cartons in the warehouse by recording the locations of the cartons and storing the data in the computer. The estimated investment, annual operating and maintenance costs, and expected annual savings are as follows: -Cost of equipment and installation: $141,400 -Project life: 4 years -Expected salvage: $13,000 -Investment in working capital (fully recoverable at the end of the project life): $18,000 -Expected annual savings on labor and materials: $55,000 -Expected annual expenses: $5,800 -Depreciation method: five-year MACRS As a part of this project, the firm will take a loan of $57,000 to be repaid in three equal annual payments at 5.5% interest. The firm's marginal tax rate is 35%. Determine the IRR of the RFID system. Express your answer as a percentage between 0 and 100."