Exam 1 Review B.xlsx - EXAM#1 REVIEW EVIEW Question 2 It will cost $2,200 to acquire an ice cream cart Cart sales are expected to be $2,000 a year for

Exam 1 Review B.xlsx - EXAM#1 REVIEW EVIEW Question 2 It...

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EXAM #1 REV
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VIEW
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Question 2 Given Information Cart Cost $2,200.00 Cart Sales $2,000.00 Years 3 Year 0 1 2 3 CFs ($2,200.00) $2,000.00 $2,000.00 $2,000.00 Cum CFs ($2,200.00) ($200.00) $1,800.00 $3,800.00 Payback Period 1.10 Payback Period 1.10 It will cost $2,200 to acquire an ice cream cart. Cart sales are expected to be $2,000 a year for three the expected life of the refrigeration unit is only three years. What is the payback period?
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years. After the three years, the cart is expected to be worthless as
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Question 3 Given Information Initial Cost $8,700.00 Cash Inflow $2,800.00 Cash Inflow $5,000.00 Cash Inflow $1,600.00 Rate 7% Years 3 Year 0 1 2 3 CFs ($8,700.00) $2,800.00 $5,000.00 $1,600.00 PV of CFs ($8,700.00) $2,616.82 $4,367.19 $1,306.08 Cum PV of CFs ($8,700.00) ($6,083.18) ($1,715.98) ($409.91) Discounted Payback Period Never A project has an initial cost of $8,700 and produces cash inflows of $2,800, $5,000, and $1,600 over th discounted payback period if the required rate of return is 7 percent?
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he next three years, respectively. What is the
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Question 4 Given Information Project A Project B Rate 13.90% 12.50% Initial Cost $54,500.00 $69,400.00 Cash Inflow $16,400.00 $0.00 Cash Inflow $28,900.00 $48,300.00 Cash Inflow $31,700.00 $42,100.00 Project A Project B Year 0 1 2 3 Year CFs ($54,500.00) $16,400.00 $28,900.00 $31,700.00 CFs NPV = $3,628.27 Accept Project A, because its NPV is positive while Project B's N Wilson's Market is considering two mutually exclusive projects that will not be repeated. The required rate Project B. Project A has an initial cost of $54,500, and should produce cash inflows of $16,400, $28,900, and initial cost of $69,400, and should produce cash inflows of $0, $48,300, and $42,100, for Years 1 to 3, respec accepted and why?
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0 1 2 3 ($69,400.00) $0.00 $48,300.00 $42,100.00 NPV = ($1,668.86) NPV is negative of return is 13.9 percent for Project A and 12.5 percent for d $31,700 for Years 1 to 3, respectively. Project B has an ctively. Which project, or projects, if either, should be
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Question 5 Given Information Project A Project B Rate 10.50% 10.50% Initial Cost $75,000.00 $72,000.00 Cash Inflow $18,500.00 $22,000.00 Cash Inflow $42,900.00 $38,000.00 Cash Inflow $28,600.00 $26,500.00 Project A Project B Year 0 1 2 3 Year CFs ($75,000.00) $18,500.00 $42,900.00 $28,600.00 CFs IRR = 9.12% Reject both projects because their IRR's are less than the requir Two mutually exclusive projects have 3-year lives and a required rate of return of 10.5 percent. Project A co $28,600 for Years 1 to 3, respectively. Project B costs $72,000 and has cash flows of $22,000, $38,000, and $ project, or projects, if either should be accepted.
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0 1 2 3 ($72,000.00) $22,000.00 $38,000.00 $26,500.00 IRR = 9.48% red rate of return. osts $75,000 and has cash flows of $18,500, $42,900, and $26,500 for Years 1 to 3, respectively. Using the IRR, which
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Question 6 Ritter Corporation's accountants prepared the following financial statements for year-end 2015.
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