Q1:Bruno's is analyzing two machines to determine which one it should purchase. The company requires a rate of return of 14.6 percent and uses straight-line depreciation to a zero book value over a machine's life. Ignore bonus depreciation and taxes. Machine A has a cost of $318,000, annual operating costs of $8,700, and a life of 3 years. Machine B costs $247,000, has annual operating costs of $9,300, and a life of 2 years. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should Bruno's purchase and why?

Select one:

a. Machine B; because it will save the company about $16,510 a year

b. Machine B; because it will save the company about $11,609 a year

c. Machine A; because it will save the company about $18,100 a year

d. $154,224.08

e. Machine A; because it will save the company about $13,406 a year

Q2:The Down Towner is considering a project with a life of 4 years that will require $164,800 for fixed assets and $42,400 for net working capital. The fixed assets will be depreciated using the Year 2018 bonus depreciation method. At the end of the project, the fixed assets can be sold for $37,500 cash and the net working capital will return to its original level. The project is expected to generate annual sales of $195,000 and costs of $117,500. The tax rate is 24 percent and the required rate of return is 13 percent. What is the project's net present value?

Select one:

a. $46,482.43

b. $59,488.87

c. $48,909.09

d. $42,316.67

e. $56,500.00