QUESTION 2 requires an initial investment of S61,000 and is expected to gencrate

Question

QUESTION 2 requires an initial investment of S61,000 and is expected to gencrate cash flows of NPV of the project that would be selected based on the replacement chain anabsis of $23,000 loday and is expected s a. Project Beta; $312,156 b. Project Alpha; $341,276 c. Project Alpha: $313,097 d. Project Alpha;$330,886 e. Project Beta; 5313,097 o generate cash flows of 548,000 for the nest 5 years QUESTION 3 O a. increase b. decrease O c. do not change QUESTION 4 3. A firm needs to estimate the Eguilvnlent Annual Aanulity (EAA) of two projects, since these pojects can be repeated indefistels Project X nequires an ininal investneet of $37,000 oday and i of $10,000 for the next 24 years Project Y requires an initial investment of $140,000 and has the highest EAA, which is expected io generate masthlycash ss of $230 fo theext I years The oost of cupi a. Project Y, $7,687 b.Project Y $10,379 G.Project Y: $10,690 d. Project X: $10,379 e Project X, $7,052 QUESTION5 med that machine would be sold at the end of the project at $12 milsien. The frm uned straighe ine diegrecasion method based on the book vaive of $12 iion at the

Explanation / Answer

Question 3:

If the salvage value increase, then tax payable on salvage Value increases.

Correct Option is a) Increase

Question 4:

Correct Option is b) Project Y, $10379

Question 2: NPV: Alpha Beta A Year 0 -23000 -61000 B Cash Flows 48600 50700 C Years 5 10 D PVAF (6%) 4.212363786 7.360087051 E PV of CF (B*D) 204720.88 373156.4135 F NPV (A+E) 181720.88 312156.4135 Correct Option a)Project Beta, $312156

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