Question
1. The following data pertains to an investment proposal: Required equipment investment $124,000 Annual cost savings $52,000 Projected life of investment 4 years Projected salvage
1. The following data pertains to an investment proposal: Required equipment investment $124,000 Annual cost savings $52,000 Projected life of investment 4 years Projected salvage value $0 Required rate of return 8% The income tax rate is 28%. To which amount is the internal rate of return on this investment closest?
A. 12.5% B. less than 6% C. 25%
2. A manufacturing company sells one product with a variable cost of $22 per unit. The company knows that the price charged will affect demand. Fixed costs are $450,000 and the following chart represents the estimated demand at various price levels. Units Sold Price 45,000 $35 60,000 $33 75,000 $31 90,000 $27 If the company recorded a profit of $ 225,000 what price was charged?
A. $35 B. $33 C. $31 D. $27
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