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Question 1:
The city council of Happy Shark Landing Bay is considering the purchase of a new fire truck. The options are Truck A and Truck B
We are assuming no scrap value at the end of the useful life period. The purchase of one of the fire trucks will be financed by money borrowed at 12% per year. What is the B/C ratio for each truck? Which fire truck should be purchased?

Question 2:
A piece of equipment used in the manufacturing of fabricated metal products initially cost a company $150,000. Using MACRS, how much can be counted towards depreciation each year? If at the end of Year 4, the machine is sold for $30,000; how much would be owed in taxes if the tax rate is 20%?

Question 3:
A new tool is being considered to be introduced into a manufacturing facility. Below is a decision tree with probabilities of different return periods. Taken into the probabilities of different revenue streams for each year, determine the Expected Value Present Worth E(PW) of the project. Assume a MARR of 10%

Question 4:
Happy Sharks Lending is offering a special introductory loan to new victims ….. uh, customers. For a loan of $3500, they will allow one to pay $250 per month for 36 months. What is the equivalent yearly interest rate for this loan? (HINT: Remember, for monthly compilation of the loan it is i/12).

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Question 2:

Class life of equipments used in the manufacture of Fabricated Metal products = 7 years (under GDS recovery)
Cost of Equipment = $ 150,000

Using MACRS table, depreciation that can be written off at the end of each year and the book value after depreciation would be as follows.

At the end of 4th year, the Equipment still has a value of $46860. As the Equipment has been sold at less than Book value at that time, a loss has been incurred and no taxes shall have to be paid over it. Only profits made in a sale over the book value remaining shall be taxable....

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