Zues Sporting Goods is a manufacturer of falconry equipment. Zues is analyzing the purchase of a...

Zues Sporting Goods is a manufacturer of falconry equipment. Zues is analyzing the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $205,000. The equipment will have an initial cost of $950,000 and have a 6-year life. There is no salvage value for the equipment. If the hurdle rate is 7%, what is the approximate net present value? Ignore income taxes.

1. $950,000
2. $27,132
3. $977,132
4. $316,667

Robolo Aviation manufactures flight simulators to train new pilots. Robolo is debating the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $200,800. The equipment will have an initial cost of $901,200 and have a 6-year life. There is no salvage value for the equipment. If the hurdle rate is 10%, what is the internal rate of return? Ignore income taxes.

1. Between 6% and 8%
2. Between 8% and 10%
3. Between 10% and 12%
4. less than zero

Daniel's Theme Park is a family favorite destination. To keep up with other theme parks, Daniel is thinking of investing in a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $108,000. The equipment will have an initial cost of $450,000 and have a 5-year life. The salvage value of the equipment is estimated to be $80,000. If the hurdle rate is 12%, what is the approximate net present value? Ignore income taxes.
1. Positive $80,000
2. Positive $450,000
3. Zero
4. Negative $15,290

Expert Solution

ekkarill92 answered 1 year ago

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