What is the name given to choosing between or among

Assignment Help Accounting Basics

Reference no: EM13566028

ABC Company is considering the purchase of a new cutting machine for $150,000. The machine has an estimated life of 15 years. ABC Company intends to use straight-line depreciation with an estimated salvage value of $0.00. The annual net cash inflow is estimated to be $30,000. ABC Company has an income tax rate of 25% and a hurdle rate of 10%

1. The Accounting Rate of Return (AROR) is equal to:

a. 8%

b. 9%

c. 10%

d. 11%

2. The Payback period is equal to:

a. 5 Years

b. 6 Years

c. 7 Years

d. 8 Years

3. The Net Present Value (NPV) is equal to:

a. $39,150

b. $40,150

c. $41,150

d. $42,150

4. The Internal Rate of Return (IRR) is equal to:

a. 13.5%

b. 14.0%

c. 14.5%

d. 15.0%

USE THE FOLLOWING INFORMATION FOR QUESTIONS 5 - 7:

ABC Company purchased an old cutting machine for $150,000 on January 1, 2010. The machine had an estimated life of 15 years. ABC Company used straight-line depreciation with an estimated salvage value of $0.00. ABC Company has an income tax rate of 25%. The old cutting machine was sold on January 1, 2013 after exactly 3 years.

5. What was the net cash inflow from the sale of the old cutting machine on January 1, 2013 when it was sold for $120,000?

a. $120,000

b. $130,000

c. $140,000

d. $150,000

6. What was the net cash inflow from the sale of the old cutting machine on January 1, 2013 when it was sold for $140,000?

a. $125,000

b. $135,000

c. $145,000

d. $155,000

7. What was the net cash inflow from the sale of the old cutting machine on January 1, 2013 when it was sold for $105,000?

a. $105,750

b. $106,750

c. $107,750

d. $108,750

8. What is the name given to choosing between or among different alternative acceptable investments due to limited investment funds?

a. Capital rationing

b. Capital investing

c. Resource rationing

d. Resource allocation

Reference no: EM13566028

Questions Cloud

Indicate whether each of the following audit procedures is : indicate whether each of the following audit procedures is a test of controls a substantive test or a dual purpose

Helen needs materials for her building business she : helen needs materials for her building business. she estimates her usage for the next four month will be 62700 in

Npv versus irr framing hanley llc has identified the : npv versus irr. framing hanley llc has identified the following two mutually exclusive projectsyear nbsp cash flow

What is the net income and ending capital balance supplies : journalize the following entries for oglala supplies 1-jan oglala purchases 100000 of merchandise from loopy and co.

What is the name given to choosing between or among : abc company is considering the purchase of a new cutting machine for 150000. the machine has an estimated life of 15

You will complete a project based on the national health : individual project project proposalyou will complete a project based on the national health service nhs within the uk.

Vango inc sells part number 86z to auto parts stores around : 1.vango inc. sells part number 86z to auto parts stores around the world. information about part number 86z is

The st vincent manufacturing company produces a single : the st. vincent manufacturing company produces a single product in a single processing department. the material is

Npv versus irr framing hanley llc has identified the : npv versus irr. framing hanley llc has identified the following two mutually exclusive projectsyearnbspnbsp cash flow

User Account

All Pages