Question : 81. The management of Wyoming Corporation considering the purchase of a : 1251740

 

 

81. The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. 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$18,750$93,750

218,75093,750

318,75093,750

418,75093,750

518,75093,750

The cash payback period for this investment is: A. 4 yearsB. 5 yearsC. 20 yearsD. 3 years

 

82. The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. 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$18,750$93,750

218,75093,750

318,75093,750

418,75093,750

518,75093,750

The average rate of return for this investment is: A. 5%B. 10%C. 25%D. 15%

 

83. The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. 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$18,750$93,750

218,75093,750

318,75093,750

418,75093,750

518,75093,750

The net present value for this investment is: A. Negative $118,145B. Positive $118,145C. Positive $19,875D. Negative $19,875

 

84. The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. 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$18,750$93,750

218,75093,750

318,75093,750

418,75093,750

518,75093,750

The present value index for this investment is: A. 1.00B. .95C. 1.25D. 1.05

 

85. Motel Corporation is analyzing a capital expenditure that will involve a cash outlay of $208,240. Estimated cash flows are expected to be $40,000 annually for seven years. The present value factors for an annuity of $1 for 7 years at interest of 6%, 8%, 10%, and 12% are 5.582, 5.206, 4.868, and 4.564, respectively. The internal rate of return for this investment is: A. 10%B. 6%C. 12%D. 8%

 

86. Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of $104,904. Estimated cash flows are expected to be $36,000 annually for four years. The present value factors for an annuity of $1 for 4 years at interest of 10%, 12%, 14%, and 15% are 3.170, 3.037, 2.914, and 2.855, respectively. The internal rate of return for this investment is: A. 2%B. 2.4%C. 14%D. 3%

 

87. 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 three years from today, assuming an earnings rate of 10%? A. $13,500B. $11,265C. $6,031D. $37,305

 

88. 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 $10,000 (rounded to the nearest dollar) to be received two years from today, assuming an earnings rate of 6%? A. $8,900B. $7,144C. $5,696D. $5,088

 

89. 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 is the present value of $4,000 (rounded to the nearest dollar) to be received at the end of each of the next 3 years, assuming an earnings rate of 12%? A. $4,984B. $6,759C. $9,608D. $24,870

 

90. 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, if an investment is made now for $22,000 that will generate a cash inflow of $8,000 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, (assuming an earnings rate of 10%)? A. $20,352B. $352C. $25,360D. $3,360