Question : 65.Refer to the information above. The return average investment for : 1259732

 

 

65.Refer to the information above. The return on average investment for this proposed investment is closest to:   

A. 8 1/3%.

 

B. 50%.

 

C. 25%.

 

D. 11.1%.

 

 

 

66.Refer to the information above. Compute the net present value of this proposed investment, using a discount rate of 12%. (An annuity table shows that the present value of $1 received annually for six years, discounted at 12%, is 4.111.)   

A. ($105,600).

 

B. ($41,078).

 

C. $369,600.

 

D. $434,121.

 

 

 

 

67.Refer to the information above. The net present value of the investment in the machine under consideration is:   

A. $40,520.

 

B. $41,933.

 

C. $60,480.

 

D. $75,160.

 

 

 

68.Refer to the information above. Upper level managers at Rooney, Inc. are concerned that employee estimates of future cash flows from the new machine may be overly optimistic. To what dollar amount can the annual after tax cash flow fall before the investment in the new machine should be rejected?   

A. $640,000.

 

B. $224,640.

 

C. $168,080.

 

D. $137,961.

 

 

 

69.The minimum rate of return used by an investor to bring future cash flows to their present value is called:   

A. The investment rate.

 

B. The prime rate.

 

C. The discount rate.

 

D. The present rate.

 

 

 

 

70.To compute a future amount from a present value, we need to know:   

A. The future value and length of time.

 

B. The interest rate and length of time.

 

C. The future annuity amount.

 

D. The present annuity amount.

 

 

 

 

71.An investment cost $80,000 with no salvage value, a 5 year useful life, and had an expected annual increase in net income of $7,000. Straight line depreciation is used. What is the expected return on average investment?   

A. 8.8%.

 

B. 20%.

 

C. 17.5%.

 

D. 10.4%.

 

 

 

72.A machine cost $46,000 and had a useful life of 4 years and a residual value of $7,000. What is the net present value of the machine if the annual cash flow is $16,000 and the company uses a discount rate of 10%? An annuity table shows the present value of $1 at 10% for 4 years to be 0.683. The present value of an ordinary annuity of $1 discounted at 10% for 4 years is 3.170.   

A. $16,501.

 

B. $33,118.

 

C. $9,501.

 

D. $13,000.

 

 

 

73.In computing the return on average investment of a particular asset, the asset’s annual depreciation expense may be viewed as:   

A. An increase in the average amount invested over the life of the asset.

 

B. An increase in the asset’s carrying value each year.

 

C. A recovery of the amount originally invested in the asset.

 

D. A decrease in the asset’s net cash flows.

 

 

 

 

74.The average carrying value (or average investment) of an asset with no salvage value is equal to:   

A. The original cost of the asset divided by its estimated useful life.

 

B. The original cost of the asset divided by two.

 

C. The average annual net cash flow of the asset multiplied by the asset’s estimated useful life.

 

D. The average annual net income of the asset multiplied by the asset’s estimated useful life.