1.Metro Industries is considering the purchase of new equipment costing $852,000 to replace existing equipment that will be sold for $127,800. The new equipment is expected to have a $142,000 salvage value at the end of its 3-year life. During the period of its use, the equipment will allow the company to produce and sell an additional 21,300 units annually at a sales price of $14 per unit. Those units will have a variable cost of $9 per unit. The company will also incur an additional $63,900 in annual fixed costs.

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(a) Calculate the net present value of the proposed equipment purchase. Assume that Metro uses a 9% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amount using a negative sign preceding the number for e.g. -59,991 or parentheses e.g. (59,991).)

Net present value

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$

(b) Do you recommend that Metro Industries invest in the new equipment?

2. Burger Botanicals produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-old machine currently in use. The new machine will cost $148,800, and installation will require an additional $2,700. The machine has a useful life of 10 years and is expected to have a salvage value of $4,500 at that time. The variable cost to operate the new machine is $8.50 per carton compared to the current machineA????1s variable cost of $8.60 per carton, and Burger expects to pack 235,000 cartons each year. If the new machine is purchased, Burger will avoid a required $8,800 overhaul of the current machine in three years. The current machine has a market value of $11,500.

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(a) Calculate the net present value of the new packaging machine. Assume that Burger Botanicals uses a 10% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amount using a negative sign preceding the number for e.g. -59,991 or parentheses e.g. (59,991).)

Net present value

Â

$

(b) Do you recommend that Burger Botanicals purchase the new machine?

(c) Assume that Burger has adopted a new 13% discount rate. Calculate the net present value of the new packaging machine. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal place, e.g. 58,971.75. Enter negative amount using a negative sign preceding the number for e.g. -59,991 or parentheses e.g. (59,991).)

Net present value

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$

Do you recommend that Burger Botanicals purchase the new machine?
3. LarryA????1s Lawn Service needs to purchase a new lawnmower costing $8,306 to replace an old lawnmower that cannot be repaired. The new lawnmower is expected to have a useful life of 4 years, with no salvage value at the end of that period.

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(a)	If LarryA????1s required rate of return is 12%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)
Â	Annual cash savings should be $

(b)	If LarryA????1s required rate of return is 20%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)
Â	Annual cash savings should be $