Reference no: EM13680545

Beyer Corporation is considering buying a machine for $34,000. Its estimated useful life is five years, with no salvage value. Beyer anticipates annual net income after taxes of $2,400 from the new machine. What is the accounting rate of return assuming that Beyer uses straight-line depreciation and that income is earned uniformly throughout each year?

12.06%
10.00%
12.56%
14.12%

7.06%A company buys a machine for $93,000 that has an expected life of nine years and no salvage value. The company anticipates a yearly net income of $11,100 after taxes of 30%, with the cash flows to be received evenly throughout of each year. What is the accounting rate of return?

39.78%
11.11%
107.42%
23.87%
11.94%

A company is planning to purchase a machine that will cost $59,000, have a seven-year life, and be depreciated using the straight-line method with no salvage value. The company expects to sell the machine's output of 4,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below:

Sales $143,000
Costs:
Manufacturing $74,000
Depreciation on machine 9,000
Selling and administrative expenses
46,000
(129,000)
Income before taxes $ 14,000
Income tax (50%) ( 7,000)
Net income
$ 7,000

What is the payback period for this machine?
1.000 year
29.500 years
4.210 years
8.430 years
3.688 years

A company is planning to purchase a machine that will cost $138,000, have a six-year life, and be depreciated using the straight-line method with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below.

Sales $210,000
Costs:
Manufacturing $80,500
Depreciation on machine 23,000
Selling and administrative expenses
58,500
(162,000)
Income before taxes $ 48,000
Income tax (50%)
( 24,000)
Net income
$ 24,000

What is the accounting rate of return for this machine?
4%
50.00%
17.39%
34.78%
33.30%

A company is considering the purchase of a new machine for $132,000. Management predicts that the machine can produce sales of $26,000 each year for the next eight years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $6,600 per year plus depreciation of $12,000 per year. The company's tax rate is 40%. What is the payback period for the new machine?

6.80 years
17.84 years
8.03 years
5.08 years
29.73 years

A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $31,200 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $16,000 per year plus depreciation of $8,000 per year. The company's tax rate is 40%. What is the approximate accounting rate of return for the machine?
18.0%
15.0%
30.0%
50.0%
1.5%

A company is considering the purchase of a new piece of equipment for $144,000. Predicted annual cash inflows from this investment are $57,600 (year 1); $48,000 (year 2); $28,800 (year 3); $22,800 (year 4); and $11,400 (year 5). The payback period is:
rev: 12_24_2013_QC_42995
3.42 years
3.00 years.
4.42 years.
2.89 years.
2.42 years.

A company is considering purchasing a machine for $29,000. The machine will generate an after-tax net income of $3,600 per year. Annual depreciation expense would be $3,100. What is the payback period for the new machine?
8.19 years.
8.06 years.
9.35 years.
8.19 years.
4.33 years.
A company wishes to buy new equipment for $100,000. The equipment is expected to generate an additional $42,500 in cash inflows for four years. All cash flows occur at year-end. A bank will make an $100,000 loan to the company at a 10% interest rate so that the company can purchase the equipment. Use the table below to determine the present value of the future cash flows and the net present value of the investment.


Year Present value of 1 at 10%
0 1.0000
1 0.9091
2 0.8264
3 0.7513
4 0.6830

$134,716 and $34,717 respectively
$177,217 and $77,217 respectively
$170,000 and $57,500 respectively
$134,717 and $69,433 respectively
$177,217 and $145,286 respectively
A given project requires a $51,000 investment and is expected to generate end-of-period annual cash inflows as follows:

Year 1 Year 2 Year 3 Total
$20,400 $12,750 $17,850 $51,000

Assuming a discount rate of 11%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:

i = 11% i = 11% i = 11%
n = 1 n = 2 n = 3
0.90090 0.81162 0.73119
$16,830
($9,222)
$41,778
($34,170)
$36,757

A company has sales of $5,797,000, a gross profit ratio of 35%, ending merchandise inventory of $391,425, and total current assets of $6,289,600. What is the days sales' in inventory ratio for the year?
6.22
37.92
14.81
108
6.75