1. Which of the following sections of the statement of cash flows include purchases and sales of longminusterm assets?

A.the nonminuscash investing and financing section

B.the operating section

C. the financing section

D. the investing section

2. Dartis Company is considering investing in a specialized equipment costing $600,000.The equipment has a useful life of 5 years and a residual value of $69,000.Depreciation is calculated using the straightminusline method. The expected net cash inflows from the investment are given below.

Year 1	208,000
2	150,000
3	163,000
4	102,000
5	137,000
Total	760,000

What is the accounting rate of return?

A. 6.85%

B.15.27%

C.13.69%

D. 17.25%

3. Nylan Manufacturing is considering two alternative investment proposals with the following details:

	Proposal X	Proposal Y
Investment	$726,000	$516,000
Useful life	5 years	4 years
Estimated annual net cash inflows	$150,000	$96,000
Residual value	$62,000	$0
Depreciation method	Straightline	Straightline
Discount rate	10%	9%

What is the total present value of future cash inflows from Proposal X?

Present value of annuity of $1:

A. $607,152

B. $742,340

C. $568,650

D. $655,487

4. The accounting rate of return method uses accrualminusbased accounting income. T or F