Question : 111. Below a table for the present value of $1 at : 1233934

 

111. 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 is the present value of $6,000 (rounded to the nearest dollar) to be received at the end of each of the next 4 years, assuming an earnings rate of 10%? A. $20,790B. $19,020C. $14,412D. $25,272

112. 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, if an investment is made now for $20,000 that will generate a cash inflow of $7,000 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment cash inflows, (assuming an earnings rate of 12%)? A. $20,352B. $3,969C. $22,190D. $21,259

113. The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine the best average rate of return. 

 

Machine A

Machine B

Machine C

Estimated Average Income

$40,000

$50,000

$75,000

Average Investment

$300,000

$250,000

$500,000

 

 

 

 

 A. Machine BB. Machine CC. Machine B or CD. Machine A

114. The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine the best cash payback. 

 

Machine A

Machine B

Machine C

Estimated Average Income

$40,000

$50,000

$75,000

Average Investment

$300,000

$250,000

$500,000

 

 

 

 

A. Machine AB. Machine CC. Machine BD. All are equal.

115. The cash payback method is widely used in evaluating investments. The following are reasons why this method is used except: A. The longer the payback, the longer the estimated life of the asset.B. The shorter the payback, the sooner the cash spend on the investment is recovered.C. The shorter the payback, the least likely the possibility of obsolescenceD. All of the above are correct.

116. The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines and have asked the accountant to analyze them to determine which of the proposals (if any) meet the company’s policy of a minimum desired rate of return of 10% using the net present value method. Each of the assets has a estimated useful life of 10 years.

 

Machine A

Machine B

Machine C

Estimated Average Income

$40,000

$50,000

$75,000

Average Investment

$300,000

$250,000

$500,000

 

 

 

 

 A. AB. BC. CD. None of the above

117. The production department is proposing the purchase of an automatic insertion machine. They have identified 3 machines, each with an estimated life of 10 years. Which machine offers the best internal rate of return?

 

Machine A

Machine B

Machine C

Annual net cash flows

$40,000

$50,000

$75,000

Average investment

$300,000

$250,000

$500,000

 

 

 

 

 A. Machine BB. Machine CC. Machine A and BD. Machine A

118. All of the following qualitative considerations may impact upon capital investments analysis except: A. manufacturing productivityB. manufacturing sunk costC. manufacturing flexibilityD. manufacturing control

119. All of the following qualitative considerations may impact upon capital investments analysis except: A. time value of moneyB. employee moraleC. the impact on product qualityD. manufacturing flexibility

120. Which of the following provisions of the Internal Revenue Code can be used to reduce the amount of the income tax expense arising from capital investment projects? A. Interest deductionB. Depreciation deductionC. Minimum tax provisionD. Charitable contributions