1.] The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $30,000, would be replaced by a new machine. The new machine would be purchased for $396,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $137,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.):(Round your answer to 1 decimal place.)

Garrison_16e_Rechecks_2019_10_12

Multiple Choice

A. 19.4%

B. 17.9%

C. 34.6%

D. 16.7%

2.] Perkins Corporation is considering several investment proposals, as shown below:

Investment Proposal A B C D

Investment required $104,000$130,000$78,000$97,500

Present value of future net cash flows $124,800$195,000$109,200$192,000

If the project profitability index is used, the ranking of the projects from most to least profitable would be:

Multiple Choice

A. D, B, C, A

B. B, D, C, A

C. B, D, A, C

D. A, C, B, D