Unformatted text preview: ent D) value method and the accrual accounting rate of return method payback method and the internal rate of return method Answer: C Diff: 2 Terms: accrual accounting rate of return (AARR) Objective: 5 AACSB: Reflective thinking 93) In the analysis of a capital budgeting proposal, for which of the following items are there no aftertax consequences? A) cash flow from operations B) gain or loss on the disposal of the asset C) reduction of D) working capital balances at the end of the useful life of the capital asset None of these answers is correct. Answer: C Diff: 2 Terms: capital budgeting Objective: 7 AACSB: Reflective thinking 94) The Alpha Beta Corporation disposes a capital asset with an original cost of $85,000 and accumulated depreciation of $54,500 for $25,000. Alpha Beta's tax rate is 40%. Calculate the aftertax cash inflow from the disposal of the capital asset. A) $2,200 B) ($2,200) C) $27,200 D) $31,500 Answer: C Explanation: C) ( Diff: 3 T 7 AACSB: Analytical skills 95) The Silver Shades Corporation disposes a capital asset with an original cost of $115,000 and accumulated depreciation of $62,500 for a salvage price of $18,000. Silver Shades's tax rate is 30%. Calculate the aftertax cash inflow from the disposal of the capital asset. A) $1,035 B) $19,035 C) $18,000 D) $28,350 Answer: D Explanation: D) ( Diff: 3 T 7 AACSB: Analytical skills 96) The Corporation has an annual cash inflow from operations from its investment in a capital asset of $50,000 each year for five Phenom years. The corporation's income tax rate is 40%. Calculate the five years' total aftertax cash inflow from operations. A) $ 250,000 B) $ 175,000 C) $ 150,000 D) $50,000 Answer: C Explanation: C) $ Diff: 3 T 7 AACSB: Analytical skills 97) The Corporation has an annual cash inflow from operations from its investment in a capital asset of $11,000 each year for five Lancaster years. The corporation's income tax rate is 25%. Calculate the five years' total aftertax cash inflow from operations. A) $5,000 B) $41,250 C) $44,000 D) $55,000 Answer: B Explanation: B) $ Diff: 3 T 7 AACSB: Analytical skills 98) Comparis on of the actual results for a project to the costs and benef...
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 Spring '10
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 Accounting, Cost Accounting, Net Present Value, The Bible, AACSB, Reflective thinking, Capital Budgeting

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