Question :
135.A project with an initial cost of $450,000 expected to : 1302835
135.A project with an initial cost of $450,000 is expected to generate returns of $80,000 per year for each of the next five years. What is the project’s payback period?
A.5.6 years
B.5.0 years
C.0.17 years
D.The investment will never be recovered.
136.An investment of $400,000 is expected to generate the following cash flows:
Year 1 $60,000
Year 2 $120,000
Year 3 $50,000
Year 4 $150,000
Year 5 $200,000
What is the investment’s payback period?
A.4.1 years
B.3.5 years
C.4.4 years
D.5.1 years
137.A $600,000 investment is expected to generate cash flows of $120,000 per year for each of the next six years. What is the investment’s payback period?
A.6.0 years
B.5.0 years
C.4.0 years
D.2.5 years
138.A project that requires an investment of $42,000 is expected to generate $14,000 of net income in Year 1, $18,000 of net income in Year 2, and $21,000 of net income in Year 3. Operating cash flows expected in Year 1 are $16,000, with Year 2 as $12,000, and year 3 as $13,000. What is the accounting rate of return for this investment?
A.11.7%
B.75.4%
C.42.1%
D.84.1%
139.Haven Company is considering the construction of a new parking lot. It will cost $125,000 to construct the lot. The income tax rate is 30%. Determine the payback period if the expected net annual operating cash inflows are $18,000 per year and the expected net income is $13,400.
A.4.0 years
B.9.9 years
C.6.9 years
D.9.3 years
140.Kahlen Upholstery is considering entering a new line of operations. Starting the business will require an initial investment in equipment of $400,000 with a salvage value of $40,000. It is expected that the new business will increase net income by $80,000 per year for five years. The equipment will be depreciated over a five-year period using straight-line depreciation with no residual value. How much is the accounting rate of return of the new business?
A.20.0%
B.40.0%
C.36.4%
D.111.1%
141.Webster Corporation is considering producing a new automobile product, Glisten. Research has determined that the company will be able to sell 50,000 units per year at $13. The product will be produced in a section of an existing factory that is currently not in use. To produce Glisten, Webster must buy a machine that costs $380,000. The machine has an expected life of five years and will have an ending residual value of $40,000. Webster will depreciate the machine over five years using the straight-line method. In addition to the cost of the machine, the company will incur incremental manufacturing costs of $535,000. Webster has an income tax rate of 30 percent, and the company’s required rate of return is 7 percent. Calculate the payback period.
A.3.8 years
B.3.3 years
C.4.7 years
D.None of these answer choices are correct.
142.Webster Corp. is considering producing a new waxing product, Glisten. Research has determined that the company will be able to sell 50,000 units per year at $13. The product will be produced in a section of an existing factory that is currently not in use. To produce Glisten, Webster must buy a machine that costs $380,000. The machine has an expected life of five years and will have an ending residual value of $40,000. Webster will depreciate the machine over five years using the straight-line method. In addition to the cost of the machine, the company will incur incremental manufacturing costs of $535,000. Webster has an income tax rate of 30 percent, and the company’s required rate of return is 7 percent. How much is the accounting rate of return?
A.8.7%
B.48.0%
C.15.7%
D.19.4%
143.A project that required a $420,000 investment generated no net income in the first year of its operations, net income of $86,000 in the second year, and net income of $100,000 in the third year. How much is the accounting rate of return for this investment?
A.88.6%
B.44.3%
C.14.8%
D.29.5%
144.Sticky Sam buys a piece of equipment for $61,400 that has a useful life of 4 years. The equipment will generate operating cash flows of $18,550 per year and will have no salvage value at the end of its expected life. The income tax rate is 30%. Straight-line depreciation is used. What is the net present value using a 6% required rate of return?
A.$44,994
B.$64,278
C.$2,878
D.($449)
