38. Foamsoft sells customized boat shoes. Currently, it sells 16,850 pairs of shoes annually at an average price of $ 79 a pair. It is considering adding a lower-priced line of shoes which sell for $ 49
39. The net present value method of capital budgeting analysis does all of the following except:
40. Graham and Harvey( 2001) found that _____ were the two most popular capital budgeting methods.
41. The primary reason that company projects with positive net present values are considered acceptable is that:
42. 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.
43. Flatte Restaurant is considering the purchase of a $ 10,800 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 2,400 soufflés per year, with each costing $ 2.80 to make and priced at $ 5.65. Assume that the discount rate is 16 percent and the tax rate is 35 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.)
Should the company make the purchase?
44. A project costing $ 6,200 initially should produce cash inflows of $ 2,860 a year for three years. After the three years, the project will be shut down and will be sold at the end of Year 4 for an
45. Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $ 2.73 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
What is the project’ s NPV?( Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)