accounting - 1.

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1.   The management of River Corporation is considering the purchase of a new machine costing $380,000. The  company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5  years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in  this situation: Year Income from Operations Net Cash Flow 1 $20,000 $95,000 2 20,000 95,000 3 20,000 95,000 4 20,000 95,000 5 20,000 95,000 The average rate of return for this investment is:    Score: 0/1    2.   Decisions to install new equipment, replace old equipment, and purchase or construct a new building are  examples of 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  Score: 0/1    3.   For years one through five, a proposed expenditure of $250,000 for a fixed asset with a 5-year life has expected  net income of $40,000, $35,000, $25,000, $25,000, and $25,000, respectively, and net cash flows of $90,000,  $85,000, $75,000, $75,000, and $75,000, respectively. The cash payback period is 3 years.    Score: 0/1    4.   Charitable contributions are often used as a means of reducing the amount of income tax expense arising from  capital investment projects.   
Background image of page 2
Score: 0/1    5.   The anticipated purchase of a fixed asset for $400,000, with a useful life of 5 years and no residual value, is  expected to yield total net income of $300,000 for the 5 years. The expected average rate of return is 37.5%. 
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 11

accounting - 1.

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online