1.CraneInc had the following activity last year: Sales $295000; Cost of goods sold $175000; Depreciation expense $20000; other selling and administrative expenses $90000; income tax expense $2500. What was the estimated net cash flow for the year?$27500
$7500
$10000
$30000
2.Sheridan, Inc. is considering purchasing equipment costing $60000with a6-year useful life. The equipment will provide annual cost savings of $15000and will be depreciated straight-line over its useful life with no salvage value.Sheridanrequires a10% rate of return.
Present Value of an Annuity of 1Period8%9%10%11%12%15%64.6234.4864.3554.2314.1113.784
What is the approximate net present value of this investment?
$7290
$30000
$3464
$5325
3.
3.Metlock, Inc. is considering purchasing equipment costing $46000with a 6-year useful life. The equipment will provide annual cost savings of $11189and will be depreciated straight-line over its useful life with no salvage value.Metlockrequires a 10% rate of return.
Present Value of an Annuity of 1Period8%9%10%11%12%15%64.6234.4864.3554.2314.1113.784
What is the approximate internal rate of return for this investment?
12%
10%
11%
9%
4.
Present Value of an Annuity of 1Periods8%9%10%10.9260.9170.90921.7831.7591.73632.5772.5312.487
A company has a minimum required rate of return of9%. It is considering investing in a project that costs $177000and is expected to generate cash inflows of $72000at the end of each year for three years. The net present value of this project is$36000.
$5232.
$18223.
$182232.
5.CheyenneCompany is considering two capital investment proposals. Estimates regarding each project are provided below:
Project SoupProject NutsInitial investment$460000$432000Annual net income3000046000Net annual cash inflow110000146000Estimated useful life5years6yearsSalvage value00
The company requires a10% rate of return on all new investments.
Present Value of an Annuity of 1Periods9%10%11%12%53.893.7913.6963.60564.4864.3554.2314.111
The cash payback period for Project Nuts is2.96years.
15.33years.
5.75years.
5.27years.
6.If a project costing $81000has a profitability index of1and the discount rate was12%, then the present value of the net cash flows was
$81000.
less than $81000.
greater than $81000.
undeterminable.
7.A project has an annual rate of return of15%. The project cost $60000, has a5-year useful life, and has no salvage value. Straight-line depreciation is used. The annual net income, exclusive of depreciation, is
$23850.
$9000.
$21000.
$16500.
8.A project that cost $66000has a useful life of5years and a salvage value of $3000. The internal rate of return is12% and the annual rate of return is18%. The amount of the annual net income is
$4140.
$5670.
$6210.
$3780.
G
