1. Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal?
Cost of Installing new equipment
Increase in net working capital requirements
Sunk costs
After-tax salvage value of old equipment
All of the above should be considered
2. An? auto-parts company is deciding whether to sponsor a racing team for a cost of? $1 million. The sponsorship would last for three years and is expected to increase cash flows by $550,000 per year. If the discount rate is 7.6?%, what will be the change in the value of the company if it chooses to go ahead with the? sponsorship?
A. $727,084
B. $641,544
C. $684,314
D. $427,696