Unformatted text preview: etire with one million dollars. How much would you need to save at the end of each year if interest rates your goal average 6% and you have a 20year work life? A) $14,565 B) $27,184 C) $120,102 D) $376,476 Answer: B Explanation: B) S
Diff: 3 T 3 AACSB: Analytical skills 55) Assume in life is to retire with 1.5 million dollars. How much would you need to save at the end of each year if interest rates your goal average 5% and you have a 25year work life? A) $ 24,555 B) $ 27,798 C) $ 31,429 D) $33,754 Answer: C Explanation: C) L
Diff: 3 T S 3 AACSB: Analytical skills 56) Assume in life is to retire with 1 million dollars. How much would you need to save at the end of each year if investment rates your goal average 9% and you have a 15year work life? A) $ 25,554 B) $ 34,059 C) $ 37,853 D) $ 41,286 Answer: B Explanation: B) L
Diff: 3 T S 3 AACSB: Analytical skills Answer the following questions using the information below: Hawkeye Cleaners has been considering the purchase of an industrial drycleaning machine. The existing machine is operable for three more years and will have a zero disposal price. If the machine is disposed now, it may be sold for $60,000. The new machine will cost $200,000 and an additional cash investment in working capital of $60,000 will be required. The new machine will reduce the average amount of time required to wash clothing and will decrease labor costs. The investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $150,000 each additional year of use. The new machine has a threeyear life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life. 57) What is the net present value of the investment, assuming the required rate ofreturn is 10%? Would the company want to purchase the new machine? A) $82,000; yes B) $50,000; no C) $(50,000); yes D) $(82,000);...
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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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