You can continue to use your less efficient machine at a cost of 8000 annually

You can continue to use your less efficient machine

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73)You can continue to use your less efficient machine at a cost of $8,000 annually for thenext five years. Alternatively, you can purchase a more efficient machine for $12,000plus $5,000 annual maintenance. At a cost of capital of 15 percent, you should:73)A)keep the old machine and save $580 in equivalent annual costsB)buy the new machine and save $600 in equivalent annual costsC)buy the new machine and save $388 in equivalent annual costsD)keep the old machine and save $388 in equivalent annual costs74)The use of a profitability index will always provide results consistent with selecting theproject with the:74)75)If the NPV of a project is greater than 0, then its profitability index is:75)76)When the NPV of an investment is positive, then the IRR will be:76)77)When mutually exclusive projects have different lives, the project which should beselected will have the:77)A)highest NPV, discounted at the opportunity cost of capital.B)lowest equivalent annual cost.C)longest life.D)highest IRR.78)If the IRR for a project is 15 percent, then the Project's NPV would be:78)9
79)If the net present value of a project which costs $20,000 is $5,000 when the discount rateis 10 percent, then the:79)80)A firm considers a project with the following cash flows: time-zero = +20,000, years 1-5= -4,500. Should the project be accepted if the cost of capital is 10 percent?80)81)In order for a manager to correctly decide to postpone an investment until one year intothe future, the NPV of the investment should:81)A)not decrease.B)grow more rapidly than the cost of capital.C)remain stable.D)grow more rapidly than the IRR.

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