Question : 131.BlackOilCompanyconsideredbuildingaservicestationinanewlocation.Theownersandtheiraccountantsdecidedthatthiswastheprofitablethingtodo.However,soonaftertheymadethisdecision,boththeinterestrateandthecostofbuildingthest : 1261849

131.BlackOilCompanyconsideredbuildingaservicestationinanewlocation.Theownersandtheiraccountantsdecidedthatthiswastheprofitablethingtodo.However,soonaftertheymadethisdecision,boththeinterestrateandthecostofbuildingthestationchanged.Inwhichcasedothesechangesbothmake it less likely that they willnowbuildthestation?

a.Interestratesriseandthecostofbuildingthestationrises.

b.Interestratesriseandthecostofbuildingthestationfalls.

c.Interestratesfallandthecostofbuildingthestationrises.

d.Interestratesfallandthecostofbuildingthestationfalls.

132.HydroGrowisconsideringbuildinganewgreenhouseinwhichtogrowtomatoes.Theboardmeetsanddecidesthatthisistherightthingtodo.Beforetheycanputtheirplansintoaction,theinterestrateincreases.Thepresentvalueofthereturnsfromthisinvestmentproject

a.isnowlowerthanitwasbefore,andsoHydroGrowislesslikelytobuildthebuilding.

b.isnowlowerthanitwasbefore,andsoHydroGrowismorelikelytobuildthebuilding.

c.isnowhigherthanitwasbefore,andsoHydroGrowislesslikelytobuildthebuilding.

d.isnowhigherthanitwasbefore,andsoHydroGrowismorelikelytobuildthebuilding.

133.HappyTrails,abicyclerentalcompany,isconsideringpurchasingthreeadditionalbicycles.Eachbicyclewouldcostthem$249.66.Attheendofthefirstyeartheincreasetotheirrevenueswouldbe$140perbicycle.Attheendofthesecondyeartheincreasetotheirrevenuesagainwouldbe$140perbicycle.Thereafter,therearenoincreasestotheirrevenues.Atwhichofthefollowinginterestratesisthesumofthepresentvaluesoftheadditionalrevenuesclosesttothepriceofabicycle?

a.5percent

b.6percent

c.7percent

d.8percent

134.HalvorsonConstructionhasaninvestmentprojectthatwouldcost$150,000todayandyieldaone-timepayoffof$167,000inthreeyears.WhatisthehighestinterestrateatwhichHalvorsonwouldfindthisprojectprofitable?

a.7%

b.6%

c.5%

d.Itisnotprofitableatanyoftheseinterestrates.

135.DobsonConstructionhasaninvestmentprojectthatwouldcost$150,000todayandyieldaone-timepayoffof$167,000inthreeyears.Amongthefollowinginterestrates,whichisthehighestoneatwhichDobsonwouldfindthisprojectprofitable?

a.5percent

b.4percent

c.3percent

d.2percent

136.TheK-Ninedogfoodcompanyisconsideringthepurchaseofadditionalcanningequipment.Theyexpectthataddingtheequipmentwillyield$200,000attheendofthefirstyearand$250,000attheendofthesecondyearandthennothingafterthat.AtwhichofthefollowingpricesandinterestrateswouldK-Ninebuytheequipment?

a.$415,000iftheinterestrateis5%

b.$419,000iftheinterestrateis4%

c.K-Ninewouldbuytheequipmentinbothcases.

d.K-Ninewouldnotbuytheequipmentineithercase.

137.SometimesOnTime(SOT)Airlinesisconsideringbuyinganewjet.SOTwouldbemorelikelytobuyanewjetiftherewereeither

a.adecreaseinthepriceofanewjetoradecreaseintheinterestrate.

b.adecreaseinthepriceofanewjetoranincreaseintheinterestrate.

c.anincreaseinthepriceofanewjetoradecreaseintheinterestrate.

d.anincreaseinthepriceofanewjetoranincreaseintheinterestrate.

138.Afirmhasthreedifferentinvestmentoptions,eachcosting$10million.OptionAwillgenerate$12millioninrevenueattheendofoneyear.OptionBwillgenerate$15millioninrevenueattheendoftwoyears.OptionCwillgenerate$18millioninrevenueattheendofthreeyears.Whichoptionshouldthefirmchoose?

a.OptionA

b.OptionB

c.OptionC

d.Theanswerdependsontherateofinterest,whichisnotspecifiedhere.

139.Afirmhasthreedifferentinvestmentoptions.OptionAwillgivethefirm$10millionattheendofoneyear,$10million at theend of twoyears, and $10million atthe end ofthree years. OptionB will givethe firm$15 million attheendofoneyear,$10millionattheendoftwoyears,and$5millionattheendofthreeyears.OptionCwillgivethefirm$30millionattheendofoneyear,andnothingthereafter.Whichoftheseoptionshasthehighestpresentvalue?

a.OptionA

b.OptionB

c.OptionC

d.Theanswerdependsontherateofinterest,whichisnotspecifiedhere.

140.Afirmhasfourdifferentinvestmentoptions.OptionAwillgivethefirm$10millionattheendofoneyear,$10million at the endof two years, and$10 million atthe end of threeyears. Option B willgive the firm $5million attheendofoneyear,$10millionattheendoftwoyears,and$15millionattheendofthreeyears.OptionCwillgive thefirm$15millionat theendofoneyear, $10millionattheendof twoyears,and$5million attheendofthreeyears.OptionDwillgivethefirm$21millionattheendofoneyear,nothingattheendoftwoyears,and$9millionattheendofthreeyears.Whichoftheseoptionshasthehighestpresentvalueiftherateofinterestis5percent?

a.OptionA

b.OptionB

c.OptionC

d.OptionD