Question
1A : The management of Lanzilotta Corporation is considering a project that would require an investment of $218,000 and would last for 6 years. The
1A:
The management of Lanzilotta Corporation is considering a project that would require an investment of $218,000 and would last for 6 years. The annual net operating income from the project would be $106,000, which includes depreciation of $31,000. The scrap value of the project's assets at the end of the project would be $26,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)
Multiple Choice
1.6 years
2.1 years
1.3 years
1.7 years
1B:
Jark Corporation has invested in a machine that cost $57,000, that has a useful life of six years, and that has no salvage value at the end of its useful life. The machine is being depreciated by the straight-line method, based on its useful life. It will have a payback period of four years. Given these data, the simple rate of return on the machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)
Multiple Choice
4.7%
5.8%
8.3%
41.7%
1C:
Trovato Corporation is considering a project that would require an investment of $60,000. No other cash outflows would be involved. The present value of the cash inflows would be $73,800. The profitability index of the project is closest to (Ignore income taxes.):
Multiple Choice
0.77
0.23
1.23
0.19
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