Question : 51. Which of the following important when evaluating long-term investments? A. Investments must : 1246982

 

51. Which of the following is important when evaluating long-term investments? 
A. Investments must earn a reasonable rate of return
B. Employees are able to determine and propose capital equipment for their divisions or departments
C. Proposals should match long term goals.
D. All of the above.

 

52. Which of the following are present value methods of analyzing capital investment proposals? 
A. Internal rate of return and average rate of return
B. Average rate of return and net present value
C. Net present value and internal rate of return
D. Net present value and payback

 

53. Which of the following is a present value method of analyzing capital investment proposals? 
A. Average rate of return
B. Cash payback method
C. Accounting rate of return
D. Net present value

 

54. By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money: 
A. has an international rate of exchange
B. is the language of business
C. is the measure of assets, liabilities, and stockholders’ equity on financial statements
D. has a time value

 

55. Which of the following are two methods of analyzing capital investment proposals that both ignore present value? 
A. Internal rate of return and average rate of return
B. Net present value and average rate of return
C. Internal rate of return and net present value
D. Average rate of return and cash payback method

 

56. The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is: 
A. cash payback method
B. net present value method
C. internal rate of return method
D. average rate of return method

 

57. The primary advantages of the average rate of return method are its ease of computation and the fact that: 
A. it is especially useful to managers whose primary concern is liquidity
B. there is less possibility of loss from changes in economic conditions and obsolescence when the commitment is short-term
C. it emphasizes the amount of income earned over the life of the proposal
D. rankings of proposals are necessary

 

58. The expected average rate of return for a proposed investment of $800,000 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. 30%
B. 15%
C. 60%
D. 7.5%

 

59. The amount of the average investment for a proposed investment of $60,000 in a fixed asset, with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $21,600 for the 4 years, is: 
A. $10,800
B. $21,600
C. $ 5,400
D. $30,000

 

60. The amount of the estimated average income for a proposed investment of $60,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of four years, no residual value, and an expected total income yield of $21,600, is: 
A. $10,800
B. $21,600
C. $ 5,400
D. $30,000

 

 

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