Question 1:

Wedge Corporation uses a discount rate of 14% and has a tax rate of 30%. The subsequent cash flows occur in the last year of a 10-year equipment selection investment project:

Cost savings for the year = $180,000

Working capital released = $120,000

Salvage value of equipment = $25,000

At the end of the 10 years when the equipment is sold, its total book value for tax purposes is zero. The total after-tax show value of the cash flows above is closest to:

$45,765

$48,465

$61,425

$71,145

Ignore income taxes in this problem.) The Poteran Company is considering a machine that can save $3,000 a year in cash operating costs each year for the next six years. At the end of six years it could have no salvage value. If this machine costs $9,060 now, the machine's internal rate of return is closest to?

Question 2:

You have deposited $7,620 in a individual account that has a guaranteed interest rate of 19 percent per year. If you are willing to completely exhaust the account, determine the maximum amount that you could withdraw at the end of each of the next 7 years? Choose the amount below that is closest to your answer.

$1,295

$2,056

$2,219

$1,089