Question : 145.Sticky Sam buys a piece of equipment for $61,400 that : 1302836

145.Sticky Sam buys a piece of equipment for $61,400 that has a useful life of 4 years. The equipment will generate operating cash flows of $18,550 per year and will have no salvage value at the end of its life. The income tax rate is 30%. Straight-line depreciation is used. How much is the internal rate of return?

A.3.3%

B.8.0%

C.30.2%

D.5.68%

146.Sticky Sam buys a piece of equipment for $61,400 that has a useful life of 4 years. The equipment will generate operating cash flows of $18,550 per year and will have no salvage value at the end of its life. The income tax rate is 30%. Straight-line depreciation is used. How much is the depreciation tax shield?

A.$10,745

B.$15,350

C.$4,605

D.$5,565

147.Sticky Sam buys a piece of equipment for $61,400 that has a useful life of 4 years. The equipment will generate operating cash flows of $18,550 per year and will have no salvage value at the end of its life. The income tax rate is 30%. Straight-line depreciation is used. What is the payback period?

A.3.3 years

B.4.7 years

C.1.21 years

D.None of these answer choices are correct.

148.Chiller Time wants to purchase a new ice cream truck which costs $56,000. The company has a cost of capital of 8%, required rate of return of 10%, and the prevailing income tax rate is 30%. The acquisition is proposed for January 1, 2014. Chiller Time expects it can sell the truck for $8,000 at end of its useful life of 4 years. Chiller Time predicts the new truck will generate net income of $5,000 and operating cash flows of $17,000 during 2014, with an increase of 5% each subsequent year. What is the accounting rate of return?

A.22.4%

B.16.8%

C.44.9%

D.17.7%

149.Wilson Productions bought a piece of equipment for $53,400 that will last for 5 years. The equipment will generate annual net operating cash inflows of $13,600 and will have a $1,000 salvage value at the end of its life. Straight-line depreciation is used. The income tax rate is 30%. What is the net present value using a 7% required rate of return?

A$2,362

B.$3,076

C.$3,362

D.None of these answer choices are correct.

150.Wonton Productions bought a piece of equipment for $55,898 that will last for 5 years. The equipment will generate net operating cash flows of $14,000 per year and will have no salvage value at the end of its life. Straight-line depreciation is used. The income tax rate is 30%. What is the internal rate of return?

A.3.99%

B.8.00%

C.25.05%

D.32%

151.Wonton Productions bought a piece of equipment for $55,898 that will last for 5 years. The equipment will generate net operating cash flows of $14,000 per year and will have no salvage value at the end of its life. Straight-line depreciation is used. The income tax rate is 30%. How much is net income or (loss) in year 2?

A.$17,354

B.$25,180

C.$2,820

D.$10,646

152.Ranger Enterprises bought a piece of equipment for $64,000 that will last for 5 years. The equipment will generate net operating cash flows of $14,000 per year and will have a $3,000 salvage value at the end of its life. Straight-line depreciation is used. The income tax rate is 30%. How long is the payback period?

A.4.6 years

B.6.5 years

C.3.8 years

D.None of these answer choices are correct.

153.Ranger Enterprises bought a piece of equipment for $64,000 that will last for 5 years. The equipment will generate net operating cash flows of $14,000 per year and will have a $3,000 salvage value at the end of its life. Straight-line depreciation is used. The income tax rate is 30%. What is the amount to be used in denominator in determining the accounting rate of return?

A.$12,200

B.$64,000

C.$13,400

D.$33,500