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QUESTION 32 Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment Working capital required Annual net cash inflows Maintenance and repairs in third year Salvage value of equipment in fourth year $ 190,000 $ 50,000 $ 100,000 $ 40,000 $ 30,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming the company's required rate of return is 17%, the profitability index of the project is closest to: O 1.22 o 1.21. O 1.17 1.33 QUESTION 33 . Assume that you are thinking about starting your own small business. You have made the following estimates regarding this opportunity: You can rent a location for your business at a cost of $36,000 per year. The equipment costs incurred to start the business would total $250,000. The equipment would have a 5-year useful life and a salvage value of $25,000. Your company's estimated sales per year would equal $350,000 and its variable cost of goods sold would be 30% of sales. Other operating costs would include 563,000 per year in salaries, $4,000 per year for insurance, $25,000 per year for utilities, and a 3% sales commission. The simple rate of return for this investment opportunity is closest to: O 20.0%. O 24.6%. 17.6%. 13.796

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