Question 1

The net present value of Project B is closest to:

Accepted Answer

A)  $55,005. 
B)  $77,805. 
C)  $105,005. 
D)  $127,805. 
A)  $55,005. 
B)  $77,805. 
C)  $105,005. 
D)  $127,805.

Question 2

If pre-tax cash flow is $100,000 and the tax rate is 20%,after-tax cash flow is:

Accepted Answer

A)  $60,000. 
B)  $80,000. 
C)  $100,000. 
D)  $120,000. 
A)  $60,000. 
B)  $80,000. 
C)  $100,000. 
D)  $120,000.

Question 3

The immediate cash outflow required for this project would be:

Accepted Answer

A)  $90,000. 
B)  $120,000. 
C)  $130,000. 
D)  $150,000. 
A)  $90,000. 
B)  $120,000. 
C)  $130,000. 
D)  $150,000.

Question 4

Horn Corporation is considering investing in a four-year project.Cash inflows from the project are expected to be as follows: Year 1,$2,000;Year 2,$2,200;Year 3,$2,400;Year 4,$2,600.If using a discount rate of 8%,the project has a positive net present value of $500.What was the amount of the original investment?

Accepted Answer

A)  $1,411. 
B)  $2,411. 
C)  $7,054. 
D)  $8,054. 
A)  $1,411. 
B)  $2,411. 
C)  $7,054. 
D)  $8,054.

Question 5

If new equipment is replacing old equipment,any salvage received from sale of the old equipment should not be considered in computing the payback period of the new equipment.

Accepted Answer

A) True 
 B)False

Question 6

Ferris Company has an old machine that is fully depreciated but has a current salvage value of $5,000.The company wants to purchase a new machine that would cost $60,000 and have a 5-year useful life and zero salvage value.Expected changes in annual revenues and expenses if the new machine is purchased are:

Accepted Answer

@#IMG-DLM& 
Required:
Compute the payback period o

Question 7

The net present value of the alternative of overhauling the present system is:

Accepted Answer

A)  ($1,279,316). 
B)  ($1,194,036). 
C)  ($1,119,316). 
D)  $801,284. 
A)  ($1,279,316). 
B)  ($1,194,036). 
C)  ($1,119,316). 
D)  $801,284.

Question 8

In comparing these two alternatives,which is the correct evaluation?

Accepted Answer

A)  Truck A should be purchased as the net present value of the costs of this alternative is the lowest. 
B)  Truck A should be purchased as the net present value of the costs of this alternative is the highest. 
C)  Truck B should be purchased as the net present value of the costs of this alternative is the lowest. 
D)  Truck B should be purchased as the net present value of the costs of this alternative is the highest. 
A)  Truck A should be purchased as the net present value of the costs of this alternative is the lowest. 
B)  Truck A should be purchased as the net present value of the costs of this alternative is the highest. 
C)  Truck B should be purchased as the net present value of the costs of this alternative is the lowest. 
D)  Truck B should be purchased as the net present value of the costs of this alternative is the highest.

Question 9

The following data pertain to an investment:   The net present value of the proposed investment is:

Accepted Answer

A)  ($3,430). 
B)  $0. 
C)  $621. 
D)  $3,355. 
A)  ($3,430). 
B)  $0. 
C)  $621. 
D)  $3,355.

Question 10

Vernon Company has been offered a 7-year contract to supply a part for the military.After careful study,the company has developed the following estimated data relating to the contract:

Accepted Answer

@#IMG-DLM& 
It is not expected that the contract w

Question 11

Some investment projects require that a company expand its working capital at the initiation of a project to service the greater volume of business that will be generated.Assuming a project in which the increased working capital will no longer be required after the end of the project,under the net present value method,these changes in working capital should be treated as:

Accepted Answer

A)  an initial cash outflow for which no discounting is necessary. 
B)  a future cash inflow for which discounting is necessary. 
C)  both an initial cash outflow for which no discounting is necessary and a future cash inflow for which discounting is necessary. 
D)  irrelevant to the net present value analysis. 
A)  an initial cash outflow for which no discounting is necessary. 
B)  a future cash inflow for which discounting is necessary. 
C)  both an initial cash outflow for which no discounting is necessary and a future cash inflow for which discounting is necessary. 
D)  irrelevant to the net present value analysis.

Question 12

Boston Company is contemplating the purchase of a new machine on which the following information has been gathered:   The company's discount rate is 16%,and the machine will be depreciated using the straight-line method.Given these data,the machine has a net present value of:

Accepted Answer

A)  ($26,100). 
B)  ($23,900). 
C)  $0. 
D)  $26,100. 
A)  ($26,100). 
B)  ($23,900). 
C)  $0. 
D)  $26,100.

Question 13

Jim is preparing a budget for his rally racing team,Olinda Racing,after recently confirming two major sponsorship agreements for the next two years with a large Canadian publishing company and with a local tourist attraction.The plan is to compete in each of the six events in the Canadian championship over the next two years.Jim estimates that he currently has $50,000 invested in his rally car "Zuke" and in the tools and equipment the team owns.Before the new season starts,his estimate is that car upgrade costs of $5,000 are required.The six races run from February to November so Jim has assumed cash flows otherwise occur evenly throughout the years as follows:

Accepted Answer

@#IMG-DLM& 
Jim is using a cost of capital of 10%

Question 14

The net present value of Project A is closest to:

Accepted Answer

A)  $67,610. 
B)  $74,450. 
C)  $81,290. 
D)  $82,241. 
A)  $67,610. 
B)  $74,450. 
C)  $81,290. 
D)  $82,241.

Question 15

What is the payback period closest to:

Accepted Answer

A)  2.1 years. 
B)  2.3 years. 
C)  2.8 years. 
D)  4.2 years. 
A)  2.1 years. 
B)  2.3 years. 
C)  2.8 years. 
D)  4.2 years.

Question 16

In order to receive $12,000 at the end of three years and $10,000 at the end of five years,how much must be invested now if you can earn 14% rate of return?

Accepted Answer

A)  $8,100. 
B)  $12,978. 
C)  $13,290. 
D)  $32,054. 
A)  $8,100. 
B)  $12,978. 
C)  $13,290. 
D)  $32,054.

Question 17

The present value of the net operating cash flows (sales less cash operating expenses)arising from the rebuilding and sale of the alternators (rounded to the nearest dollar)is:

Accepted Answer

A)  $577,950. 
B)  $582,735. 
C)  $591,950. 
D)  $596,735. 
A)  $577,950. 
B)  $582,735. 
C)  $591,950. 
D)  $596,735.

Question 18

Monson Company is considering three investment opportunities with cash flows as described below:

Accepted Answer

@#IMG-DLM& 
Required:
Compute the net present valu

Question 19

The present value of a cash flow decreases as it moves further into the future.

Accepted Answer

A) True 
 B)False

Question 20

Once the internal rate of return on a project is known,it is compared to which of the following?

Accepted Answer

A)  The tax shield. 
B)  The cost of capital rate. 
C)  The tax rate. 
D)  The net present value of the project. 
A)  The tax shield. 
B)  The cost of capital rate. 
C)  The tax rate. 
D)  The net present value of the project.

The net present value of Project B is closest to:

If pre-tax cash flow is $100,000 and the tax rate is 20%,after-tax cash flow is:

The immediate cash outflow required for this project would be:

If new equipment is replacing old equipment,any salvage received from sale of the old equipment should not be considered in computing the payback period of the new equipment.

The net present value of the alternative of overhauling the present system is:

In comparing these two alternatives,which is the correct evaluation?

The following data pertain to an investment: The net present value of the proposed investment is:

Vernon Company has been offered a 7-year contract to supply a part for the military.After careful study,the company has developed the following estimated data relating to the contract:

Boston Company is contemplating the purchase of a new machine on which the following information has been gathered: The company's discount rate is 16%,and the machine will be depreciated using the straight-line method.Given these data,the machine has a net present value of:

The net present value of Project A is closest to:

What is the payback period closest to:

In order to receive $12,000 at the end of three years and $10,000 at the end of five years,how much must be invested now if you can earn 14% rate of return?

The present value of the net operating cash flows (sales less cash operating expenses)arising from the rebuilding and sale of the alternators (rounded to the nearest dollar)is:

Monson Company is considering three investment opportunities with cash flows as described below:

The present value of a cash flow decreases as it moves further into the future.

Once the internal rate of return on a project is known,it is compared to which of the following?

An Introduction to Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Activity-Based Costing

Systems Design: Process Costing

Cost Behavior: Analysis and Use

Cost-Volume-Profit Relationships

Profit Planning

Standard Costs

Flexible Budgets and Overhead Analysis

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

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Exam 10: Decentralization

The net present value of Project B is closest to:

If pre-tax cash flow is $100,000 and the tax rate is 20%,after-tax cash flow is:

The immediate cash outflow required for this project would be:

If new equipment is replacing old equipment,any salvage received from sale of the old equipment should not be considered in computing the payback period of the new equipment.

The net present value of the alternative of overhauling the present system is:

In comparing these two alternatives,which is the correct evaluation?

The following data pertain to an investment: The net present value of the proposed investment is:

Vernon Company has been offered a 7-year contract to supply a part for the military.After careful study,the company has developed the following estimated data relating to the contract:

Boston Company is contemplating the purchase of a new machine on which the following information has been gathered: The company's discount rate is 16%,and the machine will be depreciated using the straight-line method.Given these data,the machine has a net present value of:

The net present value of Project A is closest to:

What is the payback period closest to:

In order to receive $12,000 at the end of three years and $10,000 at the end of five years,how much must be invested now if you can earn 14% rate of return?

The present value of the net operating cash flows (sales less cash operating expenses)arising from the rebuilding and sale of the alternators (rounded to the nearest dollar)is:

Monson Company is considering three investment opportunities with cash flows as described below:

The present value of a cash flow decreases as it moves further into the future.

Once the internal rate of return on a project is known,it is compared to which of the following?

An Introduction to Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Activity-Based Costing

Systems Design: Process Costing

Cost Behavior: Analysis and Use

Cost-Volume-Profit Relationships

Profit Planning

Standard Costs

Flexible Budgets and Overhead Analysis

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Filters