4| Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firm’s weighted average cost of capital is 15%. Initial investment (CF0) $85,000 $60,000
Year (t) Cash inflows (CFt)
1 $18,000 $12,000
2 18,000 14,000
3 18,000 16,000
4 18,000 18,000
5 18,000 20,000
6 20,000 25,000
7 16,000 — 40,000
8 -15,000 — 50,000

Required
a. Calculate the net present value (NPV) and profitability index of each press.
b. Using NPV, evaluate the acceptability of each press. Assume: the presses are mutually exclusive

Upscale hotels in the united states recently cut their prices by 20 percent in an effort to bolster dwindling occupancy rates among business travelers. a survey performed by a major research organization indicated that businesses are wary of current economic conditions and are now resorting to electronic media, such as the internet and the telephone, to transact business. assume a company's budget permits it to spend $5,000 per month on either business travel or electronic media to transact business. graphically illustrate how a 20 percent decline in the price of business travel would impact this company's budget set if the price of business travel was initially $1,000 per trip and the price of electronic media was $500 per hour. suppose that, after the price of business travel drops, the company issues a report indicating that its marginal rate of substitution between electronic media and business travel is 1. is the company allocating resources efficiently? explain.

Precision dyes is analyzing two machines to determine which one it should purchase. the company requires a rate of return of 15 percent and uses straight-line depreciation to a zero book value over the life of its equipment. ignore bonus depreciation. machine a has a cost of $462,000, annual aftertax cash outflows of $46,200, and a four-year life. machine b costs $898,000, has annual aftertax cash outflows of $16,500, and has a seven-year life. whichever machine is purchased will be replaced at the end of its useful life. which machine should the company purchase and how much less is that machine's eac as compared to the other machine's

Put each of them in order. you are a young entrepreneur with a startup business. you now seek credit from the bank to expand it. what are the steps you will have to take? 1. you support your loan application with relevant documents. 2. you fill out the loan application form at the bank 3. you get an approval for the loan and the money is disbursed to your business account 4. you use the credit to further your business plan. 5. you have an interview with the loan officer and you explain your business plan.