Reference no: EM133056712

1. Econo-Cool Air Conditioners cost $450 to purchase and results in an electricity bill of $140 per year. The Econo-Cool Air Conditioners lasts for 5 years. The discount rate is 17%. What is the equivalent annual cost?

2. Consider the following two machines a company can purchase. The following table provides the costs of the machines and the annual cash flows obtained from the machines over their lifetimes.

	Initial Cost	Cash Inflows per year	Years of Service
Machine A	$19,000	$5,000	7
Machine B	$7,000	$11,000	4

The discount rate is 10%.

What is the net present value for each machine?

Machine A =  

Machine B =  

3. A project has an investment cost of $250,000 and a profitability index of 0.2.  What is the net present value of the project?

NPV= 

4. A project requires an increase in net working capital of $325,000 at time 0 that will be recovered at the end of its 16 year life. If opportunity cost of capital is 3%, what is the effect on the NPV of the project?  Enter your answer rounded to two decimal places.

Effect on NPV=   

5. Daily Enterprises is purchasing a $5,000,000 machine. The machine will be depreciated using straight-line depreciation over its 9 year life and will have no salvage value. The machine will generate revenues of $7,000,000 per year along with costs of $4,000,000 per year.

If Daily's marginal tax rate is 30%, what will be the cash flow in each of years 1 to 9 (the cash flow will be the same each year)?

Enter your answer rounded to the nearest whole number.

6. A project has revenues of $99,000, expenses of $45,000, and depreciation of $10,000. The corporate tax rate is 34%. What is the operating cash flow?

Enter your response below.