SE_Ch14 - CHAPTER 14: MULTIPLE CHOICE SAMPLE EXAM QUESTIONS...

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CHAPTER 14: MULTIPLE CHOICE SAMPLE EXAM QUESTIONS ***See Solution at End of File *** Note: The following questions relate to capital budgeting. If necessary, use the present value tables factors rounded to THREE decimal places. 1. Given the data below: Investment Cost $18,000 Useful Life 6 years Annual Depreciation Expense $ 1,000 Annual Income Before Taxes $ 5,000 Calculate the payback period (ignore income taxes). a. 4.00 years b. 5.00 years c. 3.33 years d. 3.00 years e. 6.67 years 2. Project Go-Ahead calculation shows a positive number as the net present value. The expected rate of return for the project is: a. the same as the discount rate b. lower than the discount rate c. higher than the discount rate d. cannot be determined based on the information provided. 3. Determine the accounting rate of return from the following: Cost $38,000 Estimated Useful Life 10 years Salvage Value $2,000 Incremental increase in net income $5,000 per year Discount Rate 10% a. 3.70% b. 7.70% c. 13.16% d. 25.0% e. 26.3%
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4. Which of the following statements is/are true?
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This note was uploaded on 11/22/2011 for the course ACCT 230 taught by Professor Allen during the Fall '08 term at Texas A&M.

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SE_Ch14 - CHAPTER 14: MULTIPLE CHOICE SAMPLE EXAM QUESTIONS...

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