Because of rapidly advancing technology, chicago publications corporation is considering replacing its existing typesetting machine with leased equipment. the old machine, purchased two years ago, has an expected useful life of six years and is in good condition. apparently, it will continue to perform as expected for the remaining four years of its expected useful life. a four-year lease for equipment with comparable productivity can be obtained for $40,000 per year. the following data apply to the old machine: original cost $ 480,000 accumulated depreciation 160,000 current market value 190,000 estimated salvage value 10,000 required determine the annual opportunity cost of using the old machine. based on your computations, recommend whether to replace it. determine the total cost of the lease over the four-year contract. based on your computations, recommend whether to replace the old machine.

Cardinal company is considering a project that would require a $2,725,000 investment in equipment with a useful life of five years. at the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. the company’s discount rate is 14%. the project would provide net operating income each year as follows: sales $2,867,000 variable expenses 1,125,000 contribution margin 1,742,000 fixed expenses: advertising, salaries, and other fixed out-of-pocket costs $706,000 depreciation 465,000 total fixed expenses 1,171,000 net operating income $571,000 1. which item(s) in the income statement shown above will not affect cash flows? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. any boxes left with a question mark will be automatically graded as incorrect.) (a)sales (b)variable expenses (c) advertising, salaries, and other fixed out-of-pocket costs expenses (d) depreciation expense 2. what are the project’s annual net cash inflows? 3.what is the present value of the project’s annual net cash inflows? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 4.what is the present value of the equipment’s salvage value at the end of five years? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 5.what is the project’s net present value? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)