2. Rowan Roadworks is considering the purchase of a new $124,500 road grader. Rowan expects the...

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2. Rowan Roadworks is considering the purchase of a new $124,500road grader. Rowan expects the cash inflows to be $18,500 for thefirst three years, $15,000 for the following four years and $13,500for three years after that. Rowan plans to sell the used grader atthe end of the tenth year for $29,500. What is the NPV if the costof capital is 7.25%?
A. more than $4,500
B. between $4,500 and $3,000
C. between $3,000 and $1,500
D . between $1,500 and – $2,500
E. between – $2,500 and – $6,000

3. Your business is considering the purchase of a new $9,850machine. If you expect the cash inflows to be $2,500 for the firstthree years, – $1,550 in the fourth year (due to maintenance costs)and $2,200 for the following three years after that. You expect tosell the used machine at the end of the seventh year for $750. Whatis the NPV if the cost of capital is 8.5%?
A. more than $700
B. between $700 and $250
C. between $250 and – $200
D. between – $200 and – $550
E. between – $550 and – $900

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2ProjectDiscount rate00725Year012345678910Cash flow stream12450018500185001850015000150001500015000135001350043000Discounting See Answer

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2. Rowan Roadworks is considering the purchase of a new $124,500road grader. Rowan expects the cash inflows to be $18,500 for thefirst three years, $15,000 for the following four years and $13,500for three years after that. Rowan plans to sell the used grader atthe end of the tenth year for $29,500. What is the NPV if the costof capital is 7.25%?A. more than $4,500B. between $4,500 and $3,000C. between $3,000 and $1,500D . between $1,500 and – $2,500E. between – $2,500 and – $6,0003. Your business is considering the purchase of a new $9,850machine. If you expect the cash inflows to be $2,500 for the firstthree years, – $1,550 in the fourth year (due to maintenance costs)and $2,200 for the following three years after that. You expect tosell the used machine at the end of the seventh year for $750. Whatis the NPV if the cost of capital is 8.5%?A. more than $700B. between $700 and $250C. between $250 and – $200D. between – $200 and – $550E. between – $550 and – $900