**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 $62,000RATFCF Year 1. $22,000 RATFCF Year 2. $30,000 RATFCF Year 3 $38,000.

- What is the machine's NPV?

A. $5,783

B. $4,824

C. $5,442

D. $6,014

What is the Profitability Index (PI) of this machine?

- 1.28
- 1.06
- 1.19
- 1.10

What is the Internal Rate of Return of this machine?

- 20.19%
- 19.81%
- 19.19%
- 20.81%

**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 machine would increase EBDT by $42,000 annually. Builtrite's marginal tax rate is 34%.

What the RATFCF's associated with the purchase of this machine?

- $30,780
- $31,800
- $33,520
- $27,840

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 machine would increase EBDT by $42,000 annually. Builtrite's marginal tax rate is 34%.

What is the TCF associated with the purchase of this machine?

- $9,900
- $7,500
- $0
- $5,100

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