1. A new piece of specialty equipment costs $2,250,000 and will be depreciated to an expected salvage value of $250,000 on a straight-line basis over its 4-year life. Assuming a tax rate of 30%, what is its after-tax salvage value if the equipment is actually sold after 3 years for $950,000?
$140,000
$285,000
$665,000
$890,000
$950,000
2. Your firm is considering an investment opportunity. Your firm has paid $50,000 for engineering, site surveys, and environmental impact studies. There were no environmental issues so the EPA approved the project. The hard construction costs will be $950,000 to build the project, and the present value of benefits will be $1,050,000. What is the NPV of the project?
$50,000
$100,000
$150,000
$200,000
None of the above