Need help with a few questions real quick-

1. Use the table below to answer this question.

MACRS 5-year property

Year Rate

1 20.00%

2 32.00%

3 19.20%

4 11.52%

5 11.52%

6 5.76%

Sun Lee's Furniture just purchased some fixed assets classified as 5-year property for MACRS. The assets cost $56,000. What is the amount of the depreciation expense for the second year?

$11,200

$6,451

$5,600

$17,920

$8,960

2. A project is expected to create operating cash flows of $30,500 a year for three years. The initial cost of the fixed assets is $63,000. These assets will be worthless at the end of the project. An additional $2,000 of net working capital will be required throughout the life of the project. What is the project's net present value if the required rate of return is 14 percent?

$2,178.57

$5,809.78

$5,159.72

$9,159.72

$7,159.72

3. Thornley Machines is considering a 3-year project with an initial cost of $960,000. The project will not directly produce any sales but will reduce operating costs by $500,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $143,000. The tax rate is 34 percent. The project will require $26,000 in extra inventory for spare parts and accessories. Should this project be implemented if Thornley's requires a rate of return of 14 percent? Why or why not?

no; The NPV is $139,985.20

yes; The NPV is $22,572.46

yes; The NPV is $230,957.13

yes; The NPV is $113,985.20

yes; The NPV is $154,980.00

4. Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $670,000. The lot was recently appraised at $697,000. At the time of the purchase, the company spent $33,000 to grade the lot and another $4,100 to build a small building on the lot to house a parking lot attendant who has overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $1,200,000. What amount should be used as the initial cash flow for this building project?

$1,900,300

$1,904,400

$1,877,400

$1,870,000

$1,897,000

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