Question :
101. The management of Zesty Corporation considering the purchase of a : 1246967
101. The management of Zesty Corporation is considering the purchase of a new machine costing $400,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$100,000
$180,000
2
40,000
120,000
3
20,000
100,000
4
10,000
90,000
5
10,000
90,000
The cash payback period for this investment is: A. 5 yearsB. 4 yearsC. 2 yearsD. 3 years
102. The management of Indiana Corporation is considering the purchase of a new machine costing $400,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$100,000
$180,000
2
60,000
120,000
3
30,000
100,000
4
10,000
90,000
5
10,000
90,000
The average rate of return for this investment is: A. 18%B. 21%C. 53%D. 10%
103. The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$100,000
$180,000
2
40,000
120,000
3
20,000
100,000
4
10,000
90,000
5
10,000
90,000
The net present value for this investment is: A. positive $16,400B. positive $25,200C. Negative $99,600D. Negative $126,800
104. The management of Dakota Corporation is considering the purchase of a new machine costing $420,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$100,000
$180,000
2
40,000
120,000
3
20,000
100,000
4
10,000
90,000
5
10,000
90,000
The present value index for this investment is: A. 1.08B. 1.45C. 1.14D. .70
105. The management of Charlton Corporation is considering the purchase of a new machine costing $475,000. The company’s desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$20,000
$95,000
2
20,000
95,000
3
20,000
95,000
4
20,000
95,000
5
20,000
95,000
The cash payback period for this investment is: A. 4 yearsB. 5 yearsC. 20 yearsD. 3 years
106. The management of River Corporation is considering the purchase of a new machine costing $380,000. The company’s desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$20,000
$95,000
2
20,000
95,000
3
20,000
95,000
4
20,000
95,000
5
20,000
95,000
The cash payback period for this investment is: A. 4 yearsB. 5 yearsC. 20 yearsD. 3 years
107. The management of River Corporation is considering the purchase of a new machine costing $380,000. The company’s desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$20,000
$95,000
2
20,000
95,000
3
20,000
95,000
4
20,000
95,000
5
20,000
95,000
The average rate of return for this investment is: A. 5%B. 10.5%C. 25%D. 15%
108. The management of River Corporation is considering the purchase of a new machine costing $380,000. The company’s desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
Year
Income fromOperations
Net CashFlow
1
$20,000
$95,000
2
20,000
95,000
3
20,000
95,000
4
20,000
95,000
5
20,000
95,000
The net present value for this investment is: A. Positive $20,140B. Negative $20,140C. Positive $19,875D. Negative $19,875
109. Below is a table for the present value of $1 at compound interest.
Year
6%
10%
12%
1
.943
.909
.893
2
.890
.826
.797
3
.840
.751
.712
4
.792
.683
.636
5
.747
.621
.567
Below is a table for the present value of an annuity of $1 at compound interest.
Year
6%
10%
12%
1
.943
.909
.893
2
1.833
1.736
1.690
3
2.673
2.487
2.402
4
3.465
3.170
3.037
5
4.212
3.791
3.605
Using the tables above, what would be the present value of $15,000 (rounded to the nearest dollar) to be received at the end of each of the next two years, assuming an earnings rate of 6%? A. $27,495B. $26,040C. $30,000D. $25,350
110. Below is a table for the present value of $1 at compound interest.
Year
6%
10%
12%
1
.943
.909
.893
2
.890
.826
.797
3
.840
.751
.712
4
.792
.683
.636
5
.747
.621
.567
Below is a table for the present value of an annuity of $1 at compound interest.
Year
6%
10%
12%
1
.943
.909
.893
2
1.833
1.736
1.690
3
2.673
2.487
2.402
4
3.465
3.170
3.037
5
4.212
3.791
3.605
Using the tables above, what would be the present value of $8,000 (rounded to the nearest dollar) to be received one year from today, assuming an earnings rate of 12%? A. $7,544B. $7,120C. $7,272D. $7,144
