Question : 51.Six years ago, Neighborhood Hardware paid a contractor $45,000 to : 1257025

 

 

51.Six years ago, Neighborhood Hardware paid a contractor $45,000 to expand the store. At that time, the company calculated a net present value of about $6,000 for the expansion. Now, the company believes that the investment increased annual cash inflows by $8,000 per year for each of the six years. The company has a desired rate of return of 10%. What was the net present value actually achieved for this capital investment? (Do not round your PV factors and intermediate calculations. Round to the nearest dollar.)   

A. ($10,158)

 

B. ($3,000)

 

C. $34,842

 

D. $(9,207)

 

 

52.Langdon Company is considering purchasing a capital investment that is expected to provide annual cash inflows of $10,000 per year for 3 years. Assuming that Langdon’s required rate of return is 8%, what is the present value of these cash inflows? (Do not round PV factors and intermediate calculations. Round your final answer to the nearest dollar.)   

A. $24,018

 

B. $24,869

 

C. $33,121

 

D. $25,771

 

 

53.Paul Company is considering purchasing a capital investment that is expected to provide annual cash inflows of $12,000 per year for 3 years. Assuming that the required rate of return is 10%, what is the present value of these cash inflows? (Do not round PV factors and intermediate calculations. Round your final answer to the nearest dollar.)   

A. $9,016

 

B. $28,822

 

C. $29,842

 

D. $27,047

 

 

54.Saget Company is considering the purchase of equipment that would cost $35,000 and offer annual cash inflows of $10,500 over its useful life of 5 years. Assuming a required rate of return of 8%, what is the net present value of this investment opportunity?   

A. $(6,923)

 

B. $17,500

 

C. $6,923

 

D. $41,923

 

 

55.Generro Company is considering the purchase of equipment that would cost $36,000 and offer annual cash inflows of $10,500 over its useful life of 5 years. Assuming a desired rate of return of 12%, is the project acceptable?   

A. No, since the negative net present value indicates the investment will yield a rate of return below the desired rate of return.

 

B. Yes, since the investment will generate $52,500 in future cash flows, which is greater than the purchase cost of $36,000.

 

C. Yes, since the positive net present value indicates the investment will earn a rate of return greater than 12%.

 

D. The answer cannot be determined.

 

 

56.Kerwin Company is considering purchase of equipment that costs $50,000. If the useful life is expected to be 5 years and Crown’s required rate of return is 12%, what is the minimum annual cash inflow that the equipment must offer for the investment to be acceptable? (Do not round your PV factors and intermediate calculations. Round your final answer to the nearest dollar.)   

A. $8,929

 

B. $13,870

 

C. $12,076

 

D. $17,623

 

 

57.Grayson Company is considering purchase of equipment that costs $49,000 and is expected to offer annual cash inflows of $13,000. Grayson’s minimum required rate of return is 10%. How many years must the cash flows last, for the investment to be acceptable? (Do not round your PV factors and intermediate calculations. Round to nearest whole year.)   

A. 4

 

B. 5

 

C. 3

 

D. 6

 

 

58.Fenwick Company is considering purchase of equipment that costs $60,000 and is expected to offer annual cash inflows of $16,000 for 5 years. Fenwick Company’s required rate of return is 10%. What is the internal rate of return of this investment project?   

A. 11.56%

 

B. 26.67%

 

C. 16.67%

 

D. 11.00%

 

 

59.Benson Corporation is considering an investment in equipment that would cost $50,000 and provide annual cash inflows of $14,000. The company’s required rate of return is 12%; the internal rate of return for the investment is 10.5%. Should the company make this investment?   

A. No, since the internal rate of return is more than the company’s required rate of return.

 

B. Yes, since the internal rate of return is less than the company’s required rate of return.

 

C. No, since the internal rate of return is less than the company’s required rate of return.

 

D. The answer cannot be determined.

 

 

60.Findell Corporation is considering two projects, A and B, and it has gathered the following estimates for the projects:  What is the net present value for project B?   

A. $7,360

 

B. $6,100

 

C. $1,260

 

D. None of these answers is correct.