11Sharps, Inc. is considering the purchase of equipment that would cost $57,600, have a useful life of 4 years, no salvage value and would result in labor savings of $21,000 per year. The internal rate of return on the investment in the equipment is closest to (factors for selected rates are presented below):

17%18%19%20%10.8550.8470.8400.83321.5851.5661.5471.52832.2102.1742.1402.10642.7432.6902.6392.58953.1993.1273.0582.991

a.17%

b.19%

c.18%

d.20%

6

Han Corporation purchased a new machine for $110,000. The following annual sales and expenses related to the new machine are projected as:

Sales$120,000Cash Expenses$88,000Depreciation$22,000

The simple rate of return for the new machine is closest to:

a.9.1%

b.11.0%

c.49.1%

d.29.1%

19

The following information is available for a potential investment the Lee Corporation is considering:

Initial Investment$120,000Annual net cash flows27,500Annual net income15,000Salvage value20,000Useful life8 years

The investment's payback period is closest to:

a.5.1 years

b.4.4 years

c.3.6 years

d.6.7 years

20

Which of the following methods of evaluating capital investments uses accounting income rather than cash flows in its computations?

a.Net present value.

b.Payback period.

c.Internal rate of return.

d.Simple rate of return.