The ParkRidge Resort accountant has developed the following estimates relating to a proposed investment in its laundry department. \[\begin{array} { l r } \text { Cost of new laundry equipment } & \$ 40,000 \\ \text { Annual cash savings from new equipment } & \$ 8,200 \\ \text { Life of the new equipment } & 7 \text { years } \\ \text { Equipment salvage value } & \$ 6,000 \\ \text { ParkRidge Resort cost of capital } & 7 \% \end{array}\] What is the net present value of the proposed investment?

A) $6,427.8 B) $6,927.8 C) $7,427.8 D) $7,927.8 E) $8,427.8 A) $6,427.8 B) $6,927.8 C) $7,427.8 D) $7,927.8 E) $8,427.8

The Marvellous Resort accountant has developed the following estimates relating to a proposed investment in its laundry department. \[\begin{array} { l r } \text { Cost of new laundry equipment } & \$ 38,000 \\ \text { Annual cash savings from new equipment } & \$ 8,000 \\ \text { Life of the new equipment } & 7 \text { years } \\ \text { Equipment salvage value } & \$ 5,000 \\ \text { Marvellous Resort cost of capital } & 8 \% \end{array}\] What is the net present value of the proposed investment?

A) $6,063 B) $6,163 C) $6,563 D) $6,763 E) $6,963 A) $6,063 B) $6,163 C) $6,563 D) $6,763 E) $6,963

Exam 14: Investment Decision Making

The ParkRidge Resort accountant has developed the following estimates relating to a proposed investment in its laundry department. Cost of new laundry equipment \ 40,000 Annual cash savings from new equipment \ 8,200 Life of the new equipment 7 years Equipment salvage value \ 6,000 ParkRidge Resort cost of capital 7\% What is the net present value of the proposed investment?

(Multiple Choice)

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Question 21

Imagine Cairns' BarrierReef Lodge is appraising a January 1st 20X0 investment of $8,000 in a drinks vending machine that will increase accounting profits by $1,000 in 20X0, $2,000 in 20X1 and $3,000 in 20X2. At the end of 20X2, it is estimated the vending machine will be sold for $2,000. What is the projected accounting rate of return for the investment?

(Multiple Choice)

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Question 22

A travel company has raised $60,000 of long term debt and $40,000 in owners equity capital. The after tax cost of the long term debt is 6% and the club's shareholders expect a 12% return on their investment. What is the club's weighted average cost of capital?

(Multiple Choice)

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Question 23

The theoretically preferred quantitative approach to take in capital budget decision making is:

(Multiple Choice)

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Question 24

Use the following information to answer the next two questions. The Slick Hotel is appraising the merit of a proposed investment in a vending machine with an eight year life. The investment will require an initial outlay of $22,000 and provide increased cash inflows of $24,000 per annum and generate increased cash outflows of $20,000 per annum. The vending machine will be sold off for $3,000 in eight year's time. -Assuming a 6% cost of capital, what is the net present value of the Slick Hotel vending machine investment?

(Multiple Choice)

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Question 25

The Marvellous Resort accountant has developed the following estimates relating to a proposed investment in its laundry department. Cost of new laundry equipment \ 38,000 Annual cash savings from new equipment \ 8,000 Life of the new equipment 7 years Equipment salvage value \ 5,000 Marvellous Resort cost of capital 8\% What is the net present value of the proposed investment?

(Multiple Choice)

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Question 26

The Adele Tower Resort's accountant has developed the following estimates relating to a proposed investment in its laundry department. Cost of new laundry equipment Annual cash savings from new equipment Life of the new equipment Equipment salvage value Adele Tower Resort's cost of capital $\$ 40,000$ $\$ 9,000$ 7 years $\$ 4,000$ $8 \%$ What is the net present value of the proposed investment?

(Multiple Choice)

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Question 27

Showing 21 - 27 of 27

A travel company has raised $60,000 of long term debt and $40,000 in owners equity capital. The after tax cost of the long term debt is 6% and the club's shareholders expect a 12% return on their investment. What is the club's weighted average cost of capital?

The theoretically preferred quantitative approach to take in capital budget decision making is:

Introduction: Hospitality Decision Makers Use of Accounting

Analysing Transactions and Preparing Year End Financial Statements

Double Entry Accounting

Adjusting and Closing Entries

Financial Statement Analysis

Internal Control

Cost Management Issues

Cost-Volume-Profit Analysis

Budgeting and Responsibility Accounting

Flexible Budgeting and Variance Analysis

Performance Measurement

Cost Information and Pricing

Working Capital Management

Other Managerial Finance Issues

Revenue Management

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