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Question
The following data concerns a proposed equipment purchase:
| Cost | $58,000 |
| Salvage value | $ 3,000 |
| Estimated useful life | 5 years |
| Annual net cash flows | $18,000 |
| Depreciation method | Straight-line |
Assuming that net cash flows are received evenly throughout the year, the accounting rate of return is:
A. 24.13%
B. 20.98%
C. 22.95%
D. 59.00%
E. 25.45%
Answer
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Related questions
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A. Sell the units as scrap.
B. Rebuild the units.
C. It does not matter because both alternatives have the same result.
D. Neither sell nor rebuild because both alternatives produce a loss. Instead, the company should store the units permanently.
E. Throw the units away.
Q:
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Q:
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Q:
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Q:
Periods
12 Percent 1
8929 2
1.6901 3
2.4018 4
3.0373 Assuming all revenue is to be received at the end of each year, what are the net cash flows for this investment if net present value equals ($11,790)?
A. $78,210
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C. $25,750
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Q:
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B. $(251.52) and Scott would be willing to pay $29,748.48 for the machine.
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Q:
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B. It includes the time value of money.
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D. It cannot be used if a company records depreciation.
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Q:
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Year 3
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$15,000
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i = 10% n = 2
i = 10% n = 3 .9091
.8264
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Q:
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Q:
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A. To eliminate all risk.
B. To discount all future and past cash flows.
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Q:
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3,000
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B. $500 decrease
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Q:
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42
25 A. 15,000 croquet sets.
B. 12,000 volleyball games.
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Q:
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76 A. Both product A and product B should be processed further.
B. Neither product A nor product B should be processed further.
C. Only product B should be processed further.
D. Only product A should be processed further.
E. A processing further decision cannot be made from the available data.
Q:
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A. Income will decrease by $7 per unit.
B. Income will increase by $7 per unit.
C. Income will increase by $12 per unit.
D. Income will decrease by $12 per unit.
E. Income will increase by $10 per unit.
Q:
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$20 Nonproduction costs
$3 Fixed costs (in total) Overhead
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A. $23
B. $45
C. $27
D. $50
E. $5
Q:
Assume markup percentage equals desired profit divided by total costs. What is the correct calculation to determine the dollar amount of the markup per unit?
A. Total cost times markup percentage.
B. Total cost per unit times markup percentage per unit.
C. Total cost per unit divided by markup percentage per unit.
D. Markup percentage per unit divided by total cost per unit.
E. Markup percentage divided by total cost.
Q:
Capital budgeting decisions are generally based on:
A. Tentative predictions of future outcomes.
B. Perfect predictions of future outcomes.
C. Results from past outcomes only.
D. Results from current outcomes only.
E. Speculation of interest rates and economic performance only.
Q:
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.