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?