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Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a machine with the following capital budget:Initial Investment $62,000RATFCF Year 1. $22,000 RATFCF Year 2. $30,000 RATFCF Year 3 $38,000. What is the machine’s NPV? A. $5,783 B. $4,824 C. $5,442 D. $6,014 QUESTION 2 What is the Profitability Index (PI) of this machine? 1.28 1.06 1.19 1.10 QUESTION 3 What is the Internal Rate of Return of this machine? 20.19% 19.81% 19.19% 20.81% QUESTION 4 QUESTIONS 4 – 5 GO WITH THE FOLLOWING INFORMATION: Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually. Builtrite’s marginal tax rate is 34%. What the RATFCF’s associated with the purchase of this machine? $30,780 $31,800 $33,520 $27,840 QUESTION 5 Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually. Builtrite’s marginal tax rate is 34%. What is the TCF associated with the purchase of this machine?

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Builtrite has estimated their cost of capital is 14% and they are considering the purchase of a

machine with the following capital budget:Initial Investment $62,000RATFCF Year 1. $22,000 RATFCF Year 2. $30,000 RATFCF Year 3 $38,000.

  1. What is the machine’s NPV?     

       A. $5,783

B. $4,824

C. $5,442

D. $6,014QUESTION 2

What is the Profitability Index (PI) of this machine?

  1. 1.28
  2. 1.06
  3. 1.19
  4. 1.10

QUESTION 3

What is the Internal Rate of Return of this machine?

  1. 20.19%
  2. 19.81%
  3. 19.19%
  4. 20.81%

QUESTION 4

QUESTIONS 4 – 5 GO WITH THE FOLLOWING INFORMATION:

  1. Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually.  Builtrite’s marginal tax rate is 34%.

What the RATFCF’s associated with the purchase of this machine?

  1. $30,780
  2. $31,800
  3. $33,520
  4. $27,840

QUESTION 5

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually.  Builtrite’s marginal tax rate is 34%.

What is the TCF associated with the purchase of this machine?

 
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