Question : 101. The management of Zesty Corporation considering the purchase of a : 1251742

 

 

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: 

YearIncome fromOperationsNet CashFlow

1$100,000$180,000

240,000120,000

320,000100,000

410,00090,000

510,00090,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$100,000$180,000

260,000120,000

330,000100,000

410,00090,000

510,00090,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$100,000$180,000

240,000120,000

320,000100,000

410,00090,000

510,00090,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$100,000$180,000

240,000120,000

320,000100,000

410,00090,000

510,00090,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$20,000$95,000

220,00095,000

320,00095,000

420,00095,000

520,00095,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$20,000$95,000

220,00095,000

320,00095,000

420,00095,000

520,00095,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$20,000$95,000

220,00095,000

320,00095,000

420,00095,000

520,00095,000

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: 

YearIncome fromOperationsNet Cash    Flow

1$20,000$95,000

220,00095,000

320,00095,000

420,00095,000

520,00095,000

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. 

Year6%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. 

Year6%10%12%

1.943.909.893

21.8331.7361.690

32.6732.4872.402

43.4653.1703.037

54.2123.7913.605

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. 

Year6%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. 

Year6%10%12%

1.943.909.893

21.8331.7361.690

32.6732.4872.402

43.4653.1703.037

54.2123.7913.605

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