{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Q12 - Managerial Accounting 102 Chapter 12 Exam May 2011...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Managerial Accounting – 102 Chapter 12 Exam May 2011 Ignore income taxes on all problems. The following information applies to questions 1 through 4 Henley Co. is considering a capital investment of $600,000 in new equipment. It is expected to have a useful life of 10 years with no salvage value. Depreciation is computed by the straight-line method. As a result of the investment, net income is expected to increase by $52,500 per year while net cash inflows will be $112,500 per year. Henley would have to borrow the investment money at a cost of capital of 15%. 1) Annual Rate of Return (Accounting Rate of Return) = a) about 5½% b) about 12% c) about 17½% d) about 47% 2) Cash Payback Period = a) 10 years or more b) 8 ½ years or more but less than 10 years c) 6 ½ years or more but less than 8 ½ years d) 4 ½ years or more but less than 6 ½ years e) less than 4 ½ years 3) Net Present Value = 4) Internal Rate of Return = 5)When using discounted cash flow techniques,
Background image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}