12 of 25

Dandy's Fun Park is evaluating the purchase of a new game to be located on its Midway. Dandy's has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows.

	Wacky Water Race	Whack-A-Mole
Investment	$28,000	$15,000
Useful life	8	8
Estimated annual net cash inflows for 8 years	$10,000	$5,000
Residual value	$4,000	$5,000
Depreciation method	straight-line	straight-line
Required rate of return	10%	12%

What is the net present value of the Whack-A-Mole game?

Present Value of $1

Periods	4%	6%	8%	10%	12%
1	0.962	0.943	0.926	0.909	0.893
2	0.925	0.890	0.857	0.826	0.797
3	0.889	0.840	0.794	0.751	0.712
4	0.855	0.792	0.735	0.683	0.636
5	0.822	0.747	0.681	0.621	0.567
6	0.790	0.705	0.630	0.564	0.507
7	0.760	0.665	0.583	0.513	0.452
8	0.731	0.627	0.540	0.467	0.404

Present Value of Annuity of $1

Periods	4%	6%	8%	10%	12%
1	0.962	0.943	0.926	0.909	0.893
2	1.886	1.833	1.783	1.736	1.690
3	2.775	2.673	2.577	2.487	2.402
4	3.630	3.465	3.312	3.170	3.037
5	4.452	4.212	3.993	3.791	3.605
6	5.242	4.917	4.623	4.355	4.111
7	6.002	5.582	5.206	4.868	4.564
8	6.733	6.210	5.747	5.335	4.968

	($11,860)
	$25,350
	($25,350)
	$11,860

Question

13 of 25

The ________ is a budget based on multiple levels of projected sales or production.

	flexible budget
	fixed budget
	static budget
	standard budget

Question

14 of 25

What will happen to return on investment (ROI) if current assets decrease while everything else remains the same (assume the current assets decreased is part of operating current assets)?

	ROI will not be affected.
	ROI will decrease over time.
	ROI will increase over time.
	We cannot determine the direction of the effect from the information provided.

Question

15 of 25

The manager of the accounting department that may be evaluated on his or her ability to control expenses at Adidas may be in charge of a(n)

	investment center.
	revenue center.
	cost center.
	profit center.

Question

16 of 25

The number of on-time deliveries may be an example of measuring which perspective of the balanced scorecard?

	Financial
	Learning and growth
	Customer
	Internal business

Question

17 of 25

Redwood Corporation is considering two alternative investment proposals with the following data:

	Proposal X	Proposal Y
Investment	$880,000	$451,000
Useful life	9 years	9 years
Estimated annual net cash inflows for 9 years	$100,000	$86,000
Residual value	$-	$-
Depreciation method	Straight-line	Straight-line
Required rate of return	18%	6%

How long is the payback period for Proposal X?

	10.23 years
	8.80 years
	22.56 years
	5.24 years