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 
straightline 
straightline 
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 
straightline 
straightline 
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 straightline 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 straightline 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 sixyear 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 sixyear 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 WhackAMole game. Financial data about the two choices follows.
Wacky Water Race 
WhackA 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 
straightline 
straightline 
Required rate of return 
8% 
10% 
What is the total present value of future cash inflows from the WhackAMole 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 WhackAMole game. Financial data about the two choices follows.
Wacky Water Race 
WhackA 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 
straightline 
straightline 
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