Question 8.
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset
investment of $2.700 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax
life, after which time it will have a market value of $210,000. The project requires an initial investment in
net working capital of $300,000. The project is estimated to generate $2,400,000 in annual sales, with
costs of $960,000. The tax rate is 34 percent and the required return on the project is 14 percent. The
NPV for this project is $. (Negative amount should be indicated by a minus sign. Round your answer to 2
decimal places. (e.g., 32.16))
Question 13.
Summer Tyme, Inc., is considering a new three-year expansion project that requires an initial fixed asset
investment of $3.0 million. The fixed asset falls into the three-year MACRS class (
MACRS Table
) and will
have a market value of $280,000 after three years. The project requires an initial investment in net
working capital of $500,000. The project is estimated to generate $2,850,000 in annual sales, with costs
of $1,160,000. The tax rate is 40 percent and the required return on the project is 12 percent. The net
cash flow in Year 0 is $; the net cash flow in Year 1 is $; the net cash flow in Year 2 is $; and the net cash
flow in Year 3 is $. The NPV for this project is $. (Negative amounts should be indicated by a minus sign.
Round your answers to 2 decimal places. (e.g., 32.16))
Question 14.
Dog Up! Franks is looking at a new sausage system with an installed cost of $655,200. This cost will be
depreciated straight-line to zero over the project's 6-year life, at the end of which the sausage system
can be scrapped for $100,800. The sausage system will save the firm $201,600 per year in pretax
operating costs, and the system requires an initial investment in net working capital of $47,040. If the tax
rate is 34 percent and the discount rate is 10 percent, the NPV of this project is $. (Negative amount
should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))
Question 18.
value:
4.76 points
Consider an asset that costs $413,600 and is depreciated straight-line to zero over its 9-year tax life. The
asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $51,700. If the
relevant tax rate is 33 percent, the aftertax cash flow from the sale of this asset is $. (Round your answer
to 2 decimal places. (e.g., 32.16))
Question 20.
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new
machine press for $979,200 is estimated to result in $326,400 in annual pretax cost savings. The press
falls in the MACRS five-year class (
MACRS Table
), and it will have a salvage value at the end of the project
of $142,800. The press also requires an initial investment in spare parts inventory of $40,800, along with
an additional $6,120 in inventory for each succeeding year of the project. If the shop's tax rate is 32
percent and its discount rate is 17 percent, the NPV for the project is $ and Geary buy and install the
machine press. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal
places. (e.g., 32.16))