152 present value tables are needed the janus vending machine company is looking to 4310227

152) (Present value tables are needed.) The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:

	Soda Machines	Snack Machines
Investment	$75,000	$50,000
Useful life (years)	5	10
Estimated annual net cash inflows for useful life	$30,000	$18,000
Residual value	$30,000	$10,000
Depreciation method	straight-line	straight-line
Required rate of return	8%	12%

What is the net present value for the soda machines?

A) $(140,220)

B) $24,360

C) $65,220

D) $54,920

153) (Present value tables are needed.) The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:

	Soda Machines	Snack Machines
Investment	$75,000	$50,000
Useful life (years)	5	10
Estimated annual net cash inflows for useful life	$30,000	$18,000
Residual value	$30,000	$10,000
Depreciation method	straight-line	straight-line
Required rate of return	8%	12%

Using the net present value model, which alternative should Janus Vending Machine Company select?

A) The snack machines should be selected.

B) The soda machines should be selected.

C) Both investments should be selected.

D) Neither investment should be selected.

154) (Present value tables are needed.) Somerville Corporation is considering investing in specialized equipment costing $618,000. The equipment has a useful life of 5 years and a residual value of $55,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:

 

Year 1	$ 250,000
Year 2	$ 190,000
Year 3	$ 152,000
Year 4	$ 112,000
Year 5	$ 95,000
	$ 799,000

Somerville Corporation's required rate of return is 14%.

The net present value of the investment is closest to

A) $62,976 negative.

B) $5,886 negative.

C) $34,431 negative.

D) $181,000 positive.

155) (Present value tables are needed.) Somerville Corporation is considering investing in specialized equipment costing $618,000. The equipment has a useful life of 5 years and a residual value of $55,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:

 

Year 1	$ 250,000
Year 2	$ 190,000
Year 3	$ 152,000
Year 4	$ 112,000
Year 5	$ 95,000
	$ 799,000

Somerville Corporation's required rate of return is 14%.

Is the internal rate of return of the investment equal to, higher than, or lower than 14%?

A) Equal to 14%

B) Higher than 14%

C) Lower than 14%

D) Cannot be determined from the given data

156) (Present value tables are needed.) Mulheim Corporation is deciding whether to automate one phase of its production process. The equipment has a six-year life and will cost $410,000. Projected net cash inflows from the equipment are as follows:

Year 1	$ 120,000
Year 2	$ 100,000
Year 3	$ 110,000
Year 4	$ 100,000
Year 5	$ 95,000
Year 6	$ 90,000

Mulheim Corporation's hurdle rate is 12%. Assume the residual value is zero.

What is the net present value of the equipment?

A) $(18,275)

B) $3,046

C) $20,000

D) $18,275

157) (Present value tables are needed.) Mulheim Corporation is deciding whether to automate one phase of its production process. The equipment has a six-year life and will cost $410,000. Projected net cash inflows from the equipment are as follows:

Year 1	$ 120,000
Year 2	$ 100,000
Year 3	$ 110,000
Year 4	$ 100,000
Year 5	$ 95,000
Year 6	$ 90,000

Mulheim Corporation's hurdle rate is 12%.

If Mulheim Corporation decides to refurbish the equipment at a cost of $60,000 at the end of year 6, it could be used for one more year and would have a $30,000 residual value at the end of year 7. Assume the cash inflow in year 7 is $65,000. What is the NPV of just the refurbishment?

A) ($1,040)

B) $12,520

C) $15,820

D) $46,240

158) (Present value tables are needed.) O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,920,000. Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of $2,500,000. The following information is available:

	Indiana proposal	Kentucky proposal
Required investment	$1,920,000	$2,500,000
Estimated life	10 years	10 years
Estimated residual value	$50,000	$80,000
Estimated annual cash inflows over the next 10 years	$400,000	$500,000
Required rate of return	10%	10%

The net present value of the Indiana proposal is closest to

A) $538,000.

B) $557,300.

C) $461,650.

D) $1,171,800.

159) (Present value tables are needed.) O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,920,000. Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of $2,500,000. The following information is available:

	Indiana proposal	Kentucky proposal
Required investment	$1,920,000	$2,500,000
Estimated life	10 years	10 years
Estimated residual value	$50,000	$80,000
Estimated annual cash inflows over the next 10 years	$400,000	$500,000
Required rate of return	10%	10%

The net present value of the Kentucky proposal is closest to

A) $557,300.

B) $572,500.

C) $603,380.

D) $684,600.

160) (Present value tables are needed.) Family Fun Park is evaluating the purchase of a new game to be located on its Midway. Family Fun has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows.

	Wacky Water Race	Whack-A- Mole
Investment	$ 32,000	$ 22,000
Useful life	5	5
Estimated annual net cash inflows for 5 years	$ 8,000	$ 6,000
Residual value	$ 2,000	$ 1,000
Depreciation method	straight-line	straight-line
Required rate of return	8%	10%

What is the total present value of future cash inflows from the Whack-A-Mole game?

A) $22,746

B) $24,579

C) $23,367

D) $45,367

161) (Present value tables are needed.) Family Fun Park is evaluating the purchase of a new game to be located on its Midway. Family Fun has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows.

	Wacky Water Race	Whack-A- Mole
Investment	$ 32,000	$ 22,000
Useful life	5	5
Estimated annual net cash inflows for 5 years	$ 8,000	$ 6,000
Residual value	$ 2,000	$ 1,000
Depreciation method	straight-line	straight-line
Required rate of return	8%	10%

What is the total present value of future cash inflows from the Wacky Water Race game?

A) $1,306

B) $23,367

C) $33,306

D