(Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment that co

(Ignore
income taxes in this problem.) Gull Inc. is considering the acquisition of
equipment that costs $480,000 and has a useful life of 6 years with no salvage
value. The incremental net cash flows that
.jpg”>

would be generated by the equipment
are:

91.
If the discount rate is 10%, the net present value
of the investment is closest to:
A.
$654,709
B.
$234,257

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now

C.
$415,000

D.
$174,709

92.
The payback period of this investment is closest
to:
A.
3.1 years

B.
2.9 years

C.
5.0 years

D.
3.5 years

(Ignore
income taxes in this problem.) The management of Melchiori Corporation is
considering the purchase of a machine that would cost $310,000, would last for
6 years, and would have no salvage value. The machine would reduce labor and
other costs by $116,000 per year. The company requires a minimum pretax return
of 16% on all investment projects.

93.
The present value of the annual cost savings of
$116,000 is closest to:
A.
$427,460
B.
$696,000

C.
$175,448

D.
$1,041,462

94.
The net present value of the
proposed project is closest to:

A.
$286,179

B.
$386,000

C.
$117,460

D.
$158,431

(Ignore
income taxes in this problem.) Lichty Car Wash has some equipment that needs to
be rebuilt or replaced. The following information has been gathered concerning
this decision:
.jpg”>

Lichty
uses the total-cost approach and a discount rate of 10% in making capital
budgeting decisions. Regardless of which option is chosen, rebuild or replace,
at the end of five years Mr. Lichty plans to close the car wash and retire.

95.
If the new equipment is purchased, the present
value of all cash flows that occur now is:
A.
$(45,000)
B.
$(39,000)

C.
$(37,000)

D.
$(34,000)

96.
If the new equipment is purchased,
the present value of the annual cash operating costs associated with this
alternative is:
A.
$(26,537)

B.
$(15,164)

C.
$(18,463)
D.
$(37,901)

(Ignore income taxes in this problem.) The Finney
Company is reviewing the possibility of remodeling one of its showrooms and
buying some new equipment to improve sales operations. The remodeling would
cost $120,000 now and the useful life of the project is 10 years. Additional
working capital needed immediately for this project would be $30,000; the
working capital would be released for use elsewhere at the end of the 10-year
period. The equipment and other materials used in the project would have a
salvage value of $10,000 in 10 years. Finney’s discount rate is 16%.

97.
The immediate cash outflow required for this
project would be:
A.
$(120,000)

B.
$(150,000)

C.
$(90,000)
D.
$(130,000)

98. What
would the annual net cash inflows from this project have to be in order to
justify investing in remodeling?
A.
$14,495

B.
$35,842

C.
$16,147

D.
$29,158

(Ignore
income taxes in this problem.) Gillaspie, Inc., is considering the purchase of
a machine that would cost $300,000 and would last for 5 years. At the end of 5
years, the machine would have a salvage value of $51,000. The machine would
reduce labor and other costs by $86,000 per year. Additional working capital of
$10,000 would be needed immediately. All of this working capital would be
recovered at the end of the life of the machine. The company requires a minimum
pretax return of 13% on all investment projects.

99.
The combined present value of the
working capital needed at the beginning of the project and the working capital
released at the end of the project is closest to:
A.
-$8,420

B.
$25,170

C.
-$4,570

D.
$0

100.The net
present value of the proposed project is closest to:
A.
$30,155

B.
$47,139
C.
$2,462

D.
$25,585

(Ignore
income taxes in this problem.) Rushforth Manufacturing has $90,000 to invest in
either Project A or Project B. The following data are available on these
projects:
.jpg”>

Both
projects will have a useful life of 6 years. At the end of 6 years, the working
capital investment will be released for use elsewhere. Rushforth’s required
rate of return is 14%.

101.The net
present value of Project A is:
A.
$27,341
B.
$94,000

C.
$71,000

D.
$117,341

102.The
net present value of Project B is:
A.
$57,225
B.
$30,025

C.
$7,225

D.
$13,350

(Ignore
income taxes in this problem.) Meharg Corporation is considering the purchase
of a machine that would cost $120,000 and would last for 5 years. At the end of
5 years, the machine would have a salvage value of $25,000. By reducing labor
and other operating costs, the machine would provide annual cost savings of
$30,000. The company requires a minimum pretax return of 10% on all investment
projects.

103.The present
value of the annual cost savings of $30,000 is closest to:
A.
$18,630

B.
$183,163

C.
$150,000
D.
$113,730

104.The net
present value of the proposed project is closest to:
A.
$14,905
B.
-$6,270

C.
$9,255

D.
$18,730

(Ignore
income taxes in this problem.) Trybus Corporation uses a discount rate of 16%
in its capital budgeting. Partial analysis of an investment in automated
equipment with a useful life of 5 years has thus far yielded a net present
value of -$233,764. This analysis did not include any estimates of the
intangible benefits of automating this process nor did it include any estimate
of the salvage value of the equipment.

105.Ignoring any salvage value, to the nearest
whole dollar how large would the additional cash flow per year from the
intangible benefits have to be to make the investment in the automated
equipment financially attractive?
A.
$71,400
B.
$37,402

C.
$233,764

D.
$46,753

106.Ignoring any cash flows from intangible
benefits, to the nearest whole dollar how large would the salvage value of the
automated equipment have to be to make the investment in the automated
equipment financially attractive?
A.
$491,101

B.
$1,461,025
C.
$233,764

D.
$37,402

(Ignore
income taxes in this problem.) The management of Gimenez Corporation is
investigating an investment in equipment that would have a useful life of 7
years. The company uses a discount rate of 17% in its capital budgeting. Good
estimates are available for the initial investment and the annual cash
operating outflows, but not for the annual cash inflows and the salvage value
of the equipment. The net present value of the initial investment and the
annual cash outflows is -$274,265.

107.Ignoring any salvage value, to the nearest
whole dollar how large would the annual cash inflow have to be to make the
investment in the equipment financially attractive?
A.
$39,181
B.
$274,265
C.
$46,625

D.
$69,930

108.Ignoring the cash inflows, to
the nearest whole dollar how large would the salvage value of the equipment
have to be to make the investment in the equipment financially attractive?
A.
$274,265
B.
$46,625

C.
$1,613,324

D.
$823,619

(Ignore
income taxes in this problem.) Burchell Corporation is investigating buying a
small used aircraft for the use of its executives. The aircraft would have a
useful life of 7 years. The company uses a discount rate of 15% in its capital
budgeting. The net present value of the initial investment and the

annual
operating cash cost is -$594,381. Management is having difficulty estimating
the annual benefit of having the aircraft and estimating the salvage value of
the aircraft.

109.Ignoring the annual benefit, to the nearest
whole dollar how large would the salvage value of the aircraft have to be to
make the investment in the aircraft financially attractive?
A.
$3,962,540
B.
$89,157

C.
$594,381

D.
$1,580,801

110.Ignoring any salvage value, to the nearest
whole dollar how large would the annual benefit have to be to make the
investment in the aircraft financially attractive?
A.
$594,381
B.
$89,157
C.
$84,912

D.
$142,880

(Ignore
income taxes in this problem.) The management of Pattee Corporation is
considering three investment projects-M, N, and O. Project M would require an
investment of $25,000, Project N of $67,000, and Project O of $70,000. The present
value of the cash inflows would be $28,750 for Project M, $73,700 for Project
N, and $79,100 for Project O.

111.The
profitability index of investment project N is closest to:
A.
0.10

B.
0.90

C.
0.09

D.
1.10

112.Rank the
projects according to the profitability index, from most profitable to least
profitable.
A.
O, M, N

B.
O, N, M
C.
M, O, N

D.
N, M, O

(Ignore income taxes in
this problem.) Altro Corporation is considering the following three investment
.jpg”>

projects:

113.The
profitability index of investment project S is closest to:
A.
0.15

B.
1.17
C.
0.83

D.
0.17

114.Rank
the projects according to the profitability index, from most profitable to
least profitable.
A.
S, T, R
B.
R, T, S

C.
T, R, S

D.
T, S, R

(Ignore
income taxes in this problem.) The Crawford Company is pondering an investment
in a machine that costs $350,000, that will have a useful life of eight years,
and that will have a salvage value of $25,000. If this machine is purchased, a
similar, old machine will be sold at a salvage value of $40,000. The
anticipated yearly revenues and expenses associated with the new machine are:
.jpg”>

All
of the revenues and expenses except depreciation are for cash. The company’s
required rate of return is 12%. The annual cash flows occur uniformly
throughout the year.

115.The payback
period, to the nearest tenth of a year, of this investment is:
A.
6.2 years

B.
3.2 years

C.
3.6 years
D.
4.0 years

116.The simple
rate of return, to the nearest tenth of a percent, of this investment is:
A.
18.2%
B.
16.1%

C.
31.3%

D.
27.7%

(Ignore income taxes in
this problem.) Friden Company has just purchased a new piece of equipment with
.jpg”>

the following
characteristics:

117.Assume
straight-line depreciation and no salvage value. The payback period would be:
A.
4.5 years

B.
10 years
C.
2.7 years

D.
8.2 years

118.The simple
rate of return would be approximately:
A.
22.2%

B.
12.2%

C.
11.1%

D.
10%

119.(Ignore
income taxes in this problem.) Tranter, Inc., is considering a project that
would have a ten-year life and would require a $1,200,000 investment in
equipment. At the end of ten years, the project would terminate and the
equipment would have no salvage value. The project would provide net operating
.jpg”>

income each year as
follows:

All
of the above items, except for depreciation, represent cash flows. The
company’s required rate of return is 12%.
Required:
a.
Compute the project’s net present
value.
b.
Compute the project’s internal
rate of return to the nearest whole percent.

c.
Compute the project’s payback
period.

d.
Compute the project’s simple rate
of return.

120.(Ignore
income taxes in this problem.) Farah Corporation has provided the following
data concerning a
.jpg”>

proposed investment
project:

The
company uses a discount rate of 11%. The working capital would be released at
the end of the project.
Required:
Compute
the net present value of the project.

 

Looking for a Similar Assignment? Let us take care of your classwork while you enjoy your free time! All papers are written from scratch and are 100% Original. Try us today! Use Code FREE15