# Project a and b have 4 year timelines project a has

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Project A and B have 4 year timelines. Project A has an initial investment of \$120,000 and cashinﬂows of \$50,000, \$50,000 \$30,000 and \$30,000. Project B has an initial investment of \$190,000and cash inﬂows of \$80,000, \$70,000, \$70,000 and \$60,000. At what rate of interest would acompany be indifferent at choosing project A or B?25.77%24.66%23.55%22.44%21.33%ReferencesMultiple ChoiceDiﬃculty: ModerateLearning Objective: 09-04 Accountingrates of return and some of the problemswith them.
149.Award: 2.00 points150.Award: 2.00 pointsSuppose a project costs \$300 and produces cash ﬂows of \$100 over each of the following sixyears. What is the IRR of the project?There is not enough information; a discount rate is required10.0%24.3%34.9%38.1%ReferencesMultiple ChoiceDiﬃculty: EasyLearning Objective: 09-05 The internalrate of return criterion and its strengthsand weaknesses.ABC Corporation purchased an asset costing \$450,000. The asset has an 8 year life, a \$50,000salvage value, and is depreciated on a straight line method. During the past four years, ABC postednet income of \$98,000, \$112,000, \$134,000 and \$122,000. Given the following information,calculate the company's average accounting return over the past four years.35.85%30.15%25.85%20.15%15.85%ReferencesMultiple ChoiceDiﬃculty: ModerateLearning Objective: 09-04 Accountingrates of return and some of the problemswith them.
151.Award: 2.00 points152.Award: 2.00 pointsA 25- year project has a cost of \$1,500,000 and has annual cash ﬂows of \$400,000 in years 1-15,and \$200,000 in years 16-25. The company's required rate is 14%. Given this information, calculatethe IRR of the project.30.25%28.28%26.22%24.25%22.25%ReferencesMultiple ChoiceDiﬃculty: ModerateLearning Objective: 09-05 The internalrate of return criterion and its strengthsand weaknesses.A four year project that has an initial cost of \$60,000. The future cash inﬂows are \$40,000,\$30,000, \$20,000, and \$10,000, respectively. Given this information, what is the IRR for?25.68%27.14%29.35%30.03%31.38%ReferencesMultiple ChoiceDiﬃculty: ModerateLearning Objective: 09-05 The internalrate of return criterion and its strengthsand weaknesses.
153.Award: 2.00 points154.Award: 2.00 pointsFloyd Clymer is the CFO of Bonavista Mustang, a manufacturer of parts for classic automobiles.Floyd is considering the purchase of a two-ton press which will allow the firm to stamp out autofenders. The equipment costs \$250,000. The project is expected to produce after-tax cash ﬂows of\$60,000 the first year, and increase by \$10,000 annually; the after-tax cash ﬂow in year 5 will reach\$100,000. Liquidation of the equipment will net the firm \$10,000 in cash at the end of five years,making the total cash ﬂow in year five \$110,000.What is the payback period for the proposed investment?2.0 years2.4 years3.0 years3.4 yearsThe investment doesn't pay backReferencesMultiple ChoiceDiﬃculty: ModerateLearning Objective: 09-02 The paybackrule and some of its shortcomings.A project has an initial cost of \$72,500. The cash inﬂows are \$11,500, \$36,900, \$22,900, and\$18,200 over the next four years, respectively. What is the payback period?