Normal No spaci... Heading 1 Heading 2 Hea Paragraph Styles Table 10A A firm must choose from six proposals outlined below. The firm is subject to capital rationing capital budgeting the firm's cost ofcapitalis 15 percent. andhas a ofS1,000,000; Project nitial Investment IRR $200,000 400,000 17 20000 250,000 16 60,000 200,000 12 -5,000 150,000 50000 400,000 15 150,000 Using the intemal rate of retum approachto ects, which projects should the firm accept? (See Table 10.4) Question 2 Table 0.6 out of0.6 points cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capital investment proposal. The proposed asset costs and has installation costs of S3,000. The be depreciated using a five-year recovery schedule. The existing equipment, which originally cost and be s been depreciated using an five-year recovery schedule three years of depreciation has already been taken The new equipment is expected to result in incremental before-tax net profits o The firm has a 40 pereent rate. (3 ym property MACRS table: 20%, 32%, 12%, and 5%) tax The cash now pattem for the capital investment proposal (See Table 11.3) o 6 out of 0.6 points Table 11.3 Cuda e Engines, Inc must develop the relevant cash flows for a replacement capital inves Proposal. The prop. ed asset costs s30 ooo and has costs of be 32 re ciated using e-year recovery schedule existing which originally ooo and win be sold for s 10 ooo has been ACRS vean recovery and tha ee years of depreciation has aleady been taken Th result in incremental before fits 515 ooo e equipment is expected to ear. The firma percent tax rate yr property MACRS table 20%, 32%, 19% 12% 12% incrementa depreciation spense di fference between de