Quiz 7.docx - QUESTION 1 QUESTIONS 1 3 GO WITH THE...

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QUESTION 1 QUESTIONS 1 – 3 GO WITH THE FOLLOWING PROBLEM: Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a machine with the following capital budget: Initial Investment $62,00 0 RATFCF Year 1 $22,00 0 RATFCF Year 2 $30,00 0 RATFCF Year 3 $38,00 0 What is the machine’s NPV? $4,82 4 $6,01 4 $5,78 3 $5,44 2 1 points QUESTION 2 What is the Profitability Index (PI) of this machine? 1.2 8 1.0 6 1.1 0 1.1 9 1 points QUESTION 3
What is the Internal Rate of Return of this machine? 20.19 % 20.81 % 19.19 % 19.81 % 1 points QUESTION 4 QUESTIONS 4 – 5 GO WITH THE FOLLOWING INFORMATION: Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The

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