(Ignore income taxes in this problem. ) Vandezande Inc. is considering the acqui

Question

(Ignore income taxes in this problem. ) Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are: If the discount rate is 10%, the net present value of the investment is closest to: $370,000 $457,479 $234,000 $87,479 (Ignore income taxes in this problem. ) Morrel University has a small shuttle bus that is in poor mechanical condition. The bus can be either overhauled now or replaced with a new shuttle bus. The following data have been gathered concerning these two alternatives: Trade-in value in seven years ... ... ... ... $2,000 $5,000 The University could continue to use the present bus for the next seven years. Whether the present bus is used or a new bus is purchased, the bus would be traded in for another bus at the end of seven years. The University uses a discount rate of 12% and the total cost approach to net present value analysis in evaluating its investment decisions. If the present bus is repaired, the present value of the salvage received on sale of the bus seven years from now is: $904 $2,260 $(2,260) $(904)

Explanation / Answer

A 370000 C 2260

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