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Integrative: Determining relevant cash flows Lombard Company is contemplating the purchase of a new high-speed widget grinder to replace the existing grinder. The existing grinder was purchased 2 years ago at an installed cost of 60,000;itwasbeingdepreciatedunderMACRSusinga5yearrecoveryperiod.Theexistinggrinderisexpectedtohaveausablelifeof5moreyears.Thenewgrindercosts60,000; it was being depreciated under MACRS using a 5 -year recovery period. The existing grinder is expected to have a usable life of 5 more years. The new grinder costs 105,000 and requires 5,000ininstallationcosts;ithasa5yearusablelifeandwouldbedepreciatedunderMACRSusinga5yearrecoveryperiod.Lombardcancurrentlyselltheexistinggrinderfor5,000 in installation costs; it has a 5-year usable life and would be depreciated under MACRS using a 5 -year recovery period. Lombard can currently sell the existing grinder for 70,000 without incurring any removal or cleanup costs. To support the increased business resulting from purchase of the new grinder, accounts receivable would increase by 40,000,inventoriesby40,000, inventories by 30,000, and accounts payable by 58,000.Attheendof5years,theexistinggrinderwouldhaveamarketvalueofzero;thenewgrinderwouldbesoldtonet58,000. At the end of 5 years, the existing grinder would have a market value of zero; the new grinder would be sold to net 29,000 after removal and cleanup costs and before taxes. The firm is subject to a 40% tax rate. The estimated earnings before depreciation, interest, and taxes over the 5 years for both the new and the existing grinder are shown in the following table.

Year New grinder Existing grinder
1 $43,000 $26,000
2 43,000 24,000
3 43,000 22,000
4 43,000 20,000
5 43,000 18,000

b. Determine the incremental operating cash flows associated with the proposed grinder replacement. (Note: Be sure to consider the depreciation in year 6.)

Question

Determine if each of the following statements are true or false. Provide a brief explanation to justify each of your answers. a. The roots of a polynomial function are rational numbers. b. The process of finding zeros of a polynomial function is also referenced as finding the roots of the polynomial function. c. We can apply the zero-product property to determine the zeros of a polynomial function in factored form. d. The function used to model the box problem in Module 3 has two roots, at x = 0 and x = 4.25. e. The zeros of any function f represent the value(s) of x that when input into the function f return a value of 1 for the output variable f(x). f. The graph of a polynomial function is always a smooth curve, g. Polynomial functions are not always continuous.

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(a).\textbf{(a).} The roots of a polynomial functions are rational numbers.

This is a false statement because it is not necessary that the roots of a polynomial function are always rational numbers. Let us take a counterexample of polynomial function f(x)=x2+2x1f(x)=x^2+2x-1 which has irrational roots.

To find the roots of polynomial function f(x)=x2+2x1f(x)=x^2+2x-1, put f(x)=0f(x)=0 and solve for xx that means we have to solve the equation x2+2x1=0x^2+2x-1=0.

Let us solve this equation by using the quadratic formula.

According to the quadratic formula, the roots of equation ax2+bx+c=0ax^2+bx+c=0 are,

x=b±b24ac2ax=\dfrac{-b\pm\sqrt{b^2-4ac}}{2a}

In the equation x2+2x1=0x^2+2x-1=0, we have a=1a=1, b=2b=2 and c=1c=-1, therefore, the roots of the polynomial are,

x=b±b24ac2ax=2±2241(1)21x=2±4+42x=2±82x=2±2222x=2±222x=1±2\begin{align*} x&=\dfrac{-b\pm\sqrt{b^2-4ac}}{2a}\\ x&=\dfrac{-2\pm\sqrt{2^2-4\cdot1\cdot(-1)}}{2\cdot1}\\ x&=\dfrac{-2\pm\sqrt{4+4}}{2}\\ x&=\dfrac{-2\pm\sqrt{8}}{2}\\ x&=\dfrac{-2\pm\sqrt{2^2\cdot2}}{2}\\ x&=\dfrac{-2\pm2\sqrt{2}}{2}\\ x&=-1\pm\sqrt{2} \end{align*}

Thus, the roots of polynomial function f(x)=x2+2x1f(x)=x^2+2x-1 are irrational that is x=1+2x=-1+\sqrt{2} and x=12x=-1-\sqrt{2}.

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