Question : 91. Below a table for the present value of $1 at : 1233932

 

91. 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

1.69  

3

2.673

2.487

2.402

4

3.465

3.17  

3.037

5

4.212

3.791

3.605

 

 

 

 

Using the tables above, what would be the internal rate of return of an investment that required an investment of $250,000, and would generate an annual cash inflow of $65,946 for the next 5 years? A. 6%B. 10%C. 12%D. cannot be determined from the data given.

92. 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

1.69  

3

2.673

2.487

2.402

4

3.465

3.17  

3.037

5

4.212

3.791

3.605

 

 

 

 

Using the tables above, what would be the internal rate of return of an investment of $242,550 and would generate an annual cash inflow of $70,000 for the next 4 years? A. 6%B. 10%C. 12%D. cannot be determined from the data given.

93. The expected average rate of return for a proposed investment of $500,000 in a fixed asset, with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, is: A. 18%B. 48%C. 24%D. 12%

94. Which of the following is not an advantage of the average rate of return method? A. It is easy to use.B. It takes into consideration the time value of money.C. It includes the amount of income earned over the entire life of the proposal.D. It emphasizes accounting income.

95. Which of the following is an advantage of the cash payback method? A. It is easy to use.B. It takes into consideration the time value of money.C. It includes the cash flow over the entire life of the proposal.D. It emphasizes accounting income.

96. An anticipated purchase of equipment for $500,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows: 

Year

Net Income

Net Cash Flow

1

$60,000

$120,000

2

50,000

110,000

3

50,000

110,000

4

40,000

100,000

5

40,000

60,000

6

40,000

60,000

7

40,000

60,000

8

40,000

60,000

 

 

 

What is the cash payback period? A. 5 yearsB. 4 yearsC. 6 yearsD. 3 years

97. Using the following partial table of present value of $1 at compound interest, determine the present value of $20,000 to be received three years hence, with earnings at the rate of 10% a year: 

Year

6%

10%

12%

1

.943

.909

.893

2

.890

.826

.797

3

.840

.751

.712

4

.792

.683

.636

 

 

 

 

 A. $14,240B. $16,800C. $15,020D. $15,840

98. The rate of earnings is 10% and the cash to be received in two year is $10,000. Determine the present value amount, using the following partial table of 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

 

 

 

 

 A. $8,900B. $9,090C. $7,970D. $8,260

99. Jakes Company is considering the acquisition of a machine that costs $360,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual cash flow of $120,000, and annual operating income of $83,721. What is the estimated cash payback period for the machine? A. 3 yearsB. 4.3 yearsC. 2.5 yearsD. 5 years

100. The expected average rate of return for a proposed investment of $4,800,000 in a fixed asset, using straight line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $8,640,000 is: A. 25%B. 18%C. 40%D. 9.0%