Reference no: EM132884720

Questions -

Q1. Glare Company is considering the purchase of a new machine for $150,000. The machine generates annual revenues of $62,500 and annual expenses of $42,000, which include $8,100 of depreciation. What is the payback period in years on the machine approximated to one decimal point?

a. 5.2 years

b. 2.1 years

c. 1.4 years

d. 4.3 years

Q2. Los Gatos Shop is considering the purchase of a used wide-format printer costing $9,600. The wide-format printer would generate a net cash inflow of $4,000 per year for three years. At the end of three years, the printer would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation with no mid-year convention. What is the net present value for the press, assuming no taxes are paid?

a. $9,948

b. $348

c. $9,600

d. $2,400