Question
1. The management of Opray Corporation is considering the purchase of a machine that would cost $360,000, would last for 7 years, and would have
1. The management of Opray Corporation is considering the purchase of a machine that would cost $360,000, would last for 7 years, and would have no salvage value. The machine would reduce labor and other costs by $78,000 per year. The company requires a minimum pretax return of 11% on all investment projects. (Ignore income taxes.)
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the proposed project is closest to:
Multiple Choice
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$15,646
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$89,588
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$7,536
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$186,000
2. In a statement of cash flows, which of the following would be classified as an investing activity?
Multiple Choice
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The sale of the company's own common stock for cash.
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The sale of equipment.
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Interest paid to a lender.
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The issuance of bonds payable.
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