45 . What is the net present value of a project with an initial cost of $ 36,900 and cash inflows of $ 13,400 , $ 21,600 , and $ 10,000 for Years 1 to 3 , respectively ? The discount rate is 13 percent . ========================================================= FIN 571 Final Exam Guide Set 2 ( NEW )
Project A ; because it has the higher required rate of return
43 . Flatte Restaurant is considering the purchase of a $ 11,000 soufflé maker . The soufflé maker has an economic life of four years and will be fully depreciated by the straight-line method . The machine will produce 2,500 soufflés per year , with each costing $ 2.90 to make and priced at $ 5.75 . Assume that the discount rate is 16 percent and the tax rate is 34 percent .
What is the NPV of the project ? ( Do not round intermediate calculations and round your answer to 2 decimal places , e . g ., 32.16 .)
NPV $
Should the company make the purchase ? No Yes
44 . Down Under Boomerang , Inc ., is considering a new three-year expansion project that requires an initial fixed asset investment of $ 2.64 million . The fixed asset will be depreciated straight-line to zero over its three-year tax life , after which it will be worthless . The project is estimated to generate $ 2,060,000 in annual sales , with costs of $ 755,000 . The tax rate is 35 percent and the required return is 13 percent .
What is the project ’ s NPV ? ( Do not round intermediate calculations and round your answer to 2 decimal places , e . g ., 32.16 .)
NPV $
45 . What is the net present value of a project with an initial cost of $ 36,900 and cash inflows of $ 13,400 , $ 21,600 , and $ 10,000 for Years 1 to 3 , respectively ? The discount rate is 13 percent . ========================================================= FIN 571 Final Exam Guide Set 2 ( NEW )