55.Refer to the information above. The payback period of this investment is:
A. Four years.
B. Five years.
C. Six years.
D. Over six years.
56.Refer to the information above. The expected rate of return on average investment in this equipment is:
A. 15%.
B. 20%.
C. 7.5%.
D. Some other percentage.
57.Refer to the information above. The payback period for this investment is approximately:
A. 4.7 years.
B. 9 years.
C. 8.75 years.
D. 5 years.
58.Refer to the information above. The expected rate of return on average investment will be approximately:
A. 20%.
B. 43%.
C. 23%.
D. 37 1/2%.
59.The president of Nash Company is considering a proposal by the factory manager for the purchase of a machine for $72,500. The useful life would be eight years, with no residual scrap value. The use of the machine will produce a positive annual cash flow of $14,000 a year for eight years. An annuity table shows that the present value of $1 received annually for eight years and discounted at 10% is 5.335. The net present value of the proposal, discounted at 10%, is:
A. $2,190.
B. Zero.
C. ($3,868).
D. $3,868.
60.The management of Salem Corporation is considering the purchase of equipment costing $109,000 which has an estimated life of 3 years and no salvage value. The net after tax cash flow from the project for each of the three years is expected to be $45,000. The company's cost of capital is 10%. Compute the net present value of the equipment. (Present value of $1 due in three years, discounted at 10%, is 0.751; present value of $1 received annually for three years, discounted at 10%, is 2.487.)
A. ($3,616).
B. $2,548.
C. $2,915.
D. ($3,213).
61.Refer to the information above. The payback period for the investment in equipment is closest to:
A. 5 years.
B. 1 year.
C. 2.5 years.
D. 2.8 years.
62.Refer to the information above. The return on average investment for this investment is approximately:
A. 10%.
B. 20%.
C. 31%.
D. 50%.
63.Refer to the information above. Compute the net present value of this investment, using a discount rate of 12%. (An annuity table shows that the present value of $1 received annually for five years, discounted at 12%, is 3.605.)
A. $468,650.
B. $179,150.
C. $289,500.
D. $829,150.
64.Refer to the information above. The payback period for this proposed investment is:
A. 4.5 years.
B. 12.3 years.
C. 6 years.
D. 2.8 years.