Part A (a one page response is required)
1. Describe an incremental cash flow for a project. Describe three (3) concepts we need to examine to help understand how to estimate the incremental cash flow of a project.
2. Benson Co. purchases an asset for $6,000. This asset qualifies as a seven-year recovery asset under MACRS. Benson has a tax rate of 30%. The seven-year expense percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. If the asset is sold at the end of six years for $2,000, what is the cash flow from disposal? Show your work.
Part B (a ½ page response is required)
1. Briefly describe JIT inventory management.
2. Describe one (1) type of cost that is minimized with JIT control.
3. In order to use JIT, is it better to have high ordering costs or low? Provide one (1) supporting fact to justify your answer.