# 1)XYZ Corp bought a piece of equipment for \$40,000 3 years ago. It is being depreciated straight-lin

1)XYZ Corp bought a piece of equipment for \$40,000 3 years ago. It is being depreciated straight-line to zero salvage over 5 years. It can be sold today for \$18,000. What is the estimated after-tax cash flow if the equipment is sold today? The tax rate is 35%.

2)

Below are two after-tax cash flows for two proposed projects, K and T. If WACC = 6.68%, which project(s) would be acceptable?

Year          0             1              2             3

K          -20,000     8,000      8,000      8,000

T          -20,000          0             0        25,000

 a) NPV(K) > 0, acceptable; NPV(T) > 0, acceptable b) NPV(K) > 0, acceptable; NPV(T) c) NPV(K) < 0, reject; NPV(T) > 0, acceptable d )NPV(K)

3)Cale wants to have \$4,000 in 4 years. If he can earn 3.4% on his investments, how much must he invest today to reach his goal?

4)5S Corp purchased a die maker 5 years ago for \$152,745 which is being depreciated straight-line to a salvage value of \$4,750 over 7 years. The die maker is 5 years old and S Corp wants to sell the die maker today. Your boss comes to you to calculate the Book Value. You tell the boss the Book Value is ____.