1. Lowell Printing is evaluating a project that will increase sales by $50,000 and costs by $3,000 per year. The project will initially cost $70,000 for fixed assets that will be depreciated straight-line to a zero book value over the 5-year life of the project. The applicable tax rate is 35 percent. What is the operating cash flow for this project? A$32,850 B$33,680 C$34,340 D$35,450 E$36,210

2. A project will produce an operating cash flow of $8,000 a year for three years. The initial cash outlay for equipment will be $15,000. The net after-tax salvage value of $3,500 will be received at the end of the project. The project requires $1,000 of net working capital up front that will be fully recovered at the end of the project life. What is the net present value of the project if the required rate of return is 10 percent? A$7,412.51 B$7,330.69 C$7,275.73 D$7,142.66 E$7,048.32

3. Project A has an initial cost of $550,000 and projected cash flows of $250,000, $270,000, $275,000, and 300,000 for Years 1 to 4, respectively. Project B has an initial cost of $400,000 and projected cash flows of $200,000, $220,000, $230,000, and $240,000 for Years 1 to 4, respectively. What is the incremental IRR of these two mutually exclusive projects? A 11.74% B13.44% C 14.29% D 13.82% E 12.68%

4. Assume a machine costs $150,000 and lasts five years before it is replaced. The operating cost is $10,000 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 10 percent? A$43,217.22 B$45,318.94 C$47,329.66 D$49,569.62 E$51,206.83

5. Project Alpha will produce operating cash flows of $52,000 a year for five years. The project requires $150,000 of new equipment that will be depreciated straight-line to a zero book value over five years. The project will result in an immediate decrease of $10,000 in in net working capital. At the end of the project, net working capital will return to the normal level and the equipment will be sold for $30,000, before taxes. The tax rate is 34%. What is the net present value of the project given a required return of 15 percent? A$28,717.15 B$39,184.40 C$35,410.72 D$41,266.37 E$32,480.09