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24 Assume that a company purchased a new machine for $20,000 that has a salvage value of $3,000 at the end of its useful life of five years. The machine is expected to save the company $6.000 a year in cash operating costs for five years. The company's discount rate is 15% What is the net present value of this investment opportunity Multiple Choice O SU14 $1600 o S1903 52203 Which of the following equations can be used in certain situations to calculate the payback period? 25 Multiple Choice 3 01:54:07 eBook (Annual net cash inflow + Investment required) * hurdle rate (Investment required Annual net cash inflow) * hurdle rate Investment required + Annual net cash intlow Annual net cash inflow + Investment required 26 Assume that a company is considering purchasing a machine for $70,000 that will have a seven year useful life and no salvage value. The machine will lower operating costs by $18,000 per year and increase sales volume by 1.000 units per year. The company earns o contribution margin of $3.00 per unit. The company's required rate of return is 17%. The internal rate of return for this investment is closest to OL5400 Multiple Choice o 23 O 25 O 21 191 Assume that you are thinking about starting your own small business. The equipment costs incurred to start the business would total $330,000 The equipment would have a 5 year useful life and a salvage value of $30,000 Anet analyzing all of the appropriate information, you estimated the project's financial viability as follows 27 5340 Net prenent value $34,081 Internal rate of return 211 Payback period 3:01 years Simple rate of return 15 However, after further consideration, you decide to revise the equipment's estimated salvage value from $25,000 to $35.000. Which of the following statements is false with respect to your revised estimate of the equipment's salvage value? Multiple Choice it will increase the projects internal rate of return it will increase the projecte present value $ it will decrease the project payback period 28 Assume that a company purchased a new machine for $20,000 that has a salvage value of $2,000 ot the end of its useful life of five years. The machine is expected to save the company 56,000 a year in cash operating costs for five years. The machine's internal rate of return is closest to 015140 Multiple Choice 17% 19% 15 201

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