## (Solution Download) 1. You are evaluating two different silicon wafer milling machines. The Techron I costs \$246,000, ha

1. You are evaluating two different silicon wafer milling

machines. The Techron I costs \$246,000, has a three-year life, and

has pretax operating costs of \$65,000 per year. The Techron II

costs \$430,000, has a five-year life, and has pretax operating

costs of \$38,000 per year. For both milling machines, use

straight-line depreciation to zero over the projectAc??cs life and

assume a salvage value of \$42,000. If your tax rate is 34 percent

and your discount rate is 8 percent, compute the EAC for both

machines. (Negative amounts should be indicated by a minus

sign. Do not round intermediate calculations and round your final

answers to 2 decimal places. (e.g., 32.16))

 EAC Techron I \$ Techron II \$

 2. A proposed new project has projected sales of \$134,000, costs of \$68,000, and depreciation of \$13,700. The tax rate is 35 percent. Calculate operating cash flow using the four different approaches.

 Approaches Operating cash flow EBIT + Depreciation - Taxes \$ Top-down \$ Tax-shield \$ Bottom-up \$

 3. Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of \$2.43 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate \$1,990,000 in annual sales, with costs of \$685,000. The tax rate is 30 percent and the required return on the project is 18 percent. What is the projectAc??cs NPV? (Round your answer to 2 decimal places. (e.g., 32.16))

 NPV \$

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