ADMS 1500 Quiz #2 Summer 2011 Solution Version B

ADMS 1500 Quiz #2 Summer 2011 Solution Version B - Solution...

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Solution Version B 1. Baskin Robins is considering opening a new store in Alberta. The company will take a 5-year lease on store premises. The investment will be $1,000,000, and the cash inflows are expected to be as follows: Year 1: $ 250,000 Year 2: $100,000 Year 3: $350,000 Year 4: $200,000 Year 5: $100,000 Year 6: $200,000 The payback for Baskin Robins is _______________. a) 5 years b) 4 years c) 3 years d) 2 years e) 1 years 2. Softcorp Inc. . is considering buying new computer software that will help the company in efficient production planning and cost reduction of widget sales. The cost is $100,000. The benefit will be an additional cash inflow of $50,000 for five years, at which point the software will need replacing with a more modern version. The return on initial investment is _______________. a) 10.0% b) 12.5% c) 30.0% d) 20.0% e) none of the above 3. Precor Inc. had operating profit of $250,000. The organization paid 10% interest on $500,000 of debt and $50,000 of taxes. The company also paid a
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ADMS 1500 Quiz #2 Summer 2011 Solution Version B - Solution...

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