FIN 300 QUIZ 7 CAPBUD FALL 2020C.pdf - QUIZ 7 CAPITAL...

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QUIZ 7 CAPITAL BUDGETING FALL 2020 SOLUTIONS ONE VERSION **This quiz is the property of David Hoffman and may not be reproduced or posted online.** 1. Builtrite has estimated their cost of capital is 15% and they are considering the purchase of a machine with the following capital budget: Initial Investment $65,000 RATFCF Year 1 $28,000 RATFCF Year 2 $34,000 RATFCF Year 3 $32,000 What is the machine’s NPV? . 2. Builtrite is considering the purchase of a machine with the following cash flow diagram: year 0 spend $40,000 year 1 $15,000 year 2 $20,000 year 3 $20,000 year 4 $25,000

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