What is the maximum amount of money

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Reference no: EM13202430

1. Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $560,000 (in today's dollars) over the next 5 years. The existing robotics would produce benefits of $400,000 (also in today's dollars) over that same period. An initial cash investment of $220,000 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $70,000. Show how Ken will apply marginal-cost-benefit analysis techniques to determine the net benefit of the proposed new robotics. (Please calculate the arithmetic solution and show your work)

2. Given the following statement, please indicate whether it is true or false, and why: "High cash flow is generally associated with a lower share price whereas higher risk tends to result in a higher share price."

3. Given the following statement, please indicate whether it is true or false, and why: "Dividend payments change directly with changes in earnings per share."

4. You have been offered a project paying $300 at the beginning of each year for the next 20 years. What is the maximum amount of money you would invest in this project if you expect 9 percent rate of return to your investment?

Reference no: EM13202430

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