review for final.docx - eview Test Submission Quiz 10 Prepare for Final Course Test Status Attempt Score Results Displayed 2019 Cost Capital Project

# review for final.docx - eview Test Submission Quiz 10...

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eview Test Submission: Quiz 10 - Prepare for Final Course 2019 Cost Capital Project Analysis Test Quiz 10 - Prepare for Final Status Completed Attempt Score 16.666 out of 99.996 points Results Displayed All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions Question 1 0 out of 8.333 points A company is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine? Initial cost \$145,000 MARR 18%p y c y Inflation rate 4%p y c y Life 7years Project life 10years Machine value today with life of 3 years \$64,500 Machine value today with life of 7 years \$33,500 First year costs \$62,200 First year benefits \$96,800 Selected Answer: \$2,9 69 Answers: \$3,2 60 \$2,9 69 \$1,7 79 \$985 Response Feedback: Answer is 4. Initial costCosts Salvage Benefits Net CF 0 (\$145,000 ) (\$145,000)
1 (\$62,200 ) \$96,800 \$34,600 2 (\$64,688 ) \$100,672\$35,984 3 (\$67,276 ) \$104,699\$37,423 4 (\$69,967 ) \$108,887\$38,920 5 (\$72,765 ) \$113,242\$40,477 6 (\$75,676 ) \$117,772\$42,096 7 (\$190,810 ) (\$78,703 ) \$44,084 \$122,483 (\$102,946) 8 (\$81,851 ) \$127,382\$45,531 9 (\$85,125 ) \$132,477\$47,352 10 (\$88,530 ) \$95,476 \$137,777\$144,722 NPV \$4,426.34 EUAW \$985 Question 2 0 out of 8.333 points A company is offering you terms for payment on an invoice of \$25,000 of "Discount 1% in 10 days Net 30 days." This means that you can either pay 99% of the amount due in 10 days or pay the entire amount in 30 days. What is the effective rate per year compounded yearly that you will be able to earn on the amount if you take the discount? Selected Answer: 35.14 % Answers: 20.13 % 22.62 % 35.14 % 14.32 % Response Feedback: Answer is 1. Invoice amount \$25,000 Discount 1%
Pay in 10 days \$24,750 PV (\$24,750 ) FV \$25,000 Full payment due 30 days NPER 20 days RATE 0.05% p d c d APR 18.35% p y c d NPERY 365 Effective rate 20.13% p y c y Question 3 0 out of 8.333 points A company would like to purchase a machine at a cost of \$325,000 with a life of 5 years. Their bank is ready to finance 90% of the machine at a rate of 8% per year

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