2. Bevans Corporation is considering a capital budgeting project that would require an initial investment of $190,000. The investment would generate annual cash inflows of $58,000 for the life of the project, which is 4 years. The company's discount rate is 7%. What is the net present value of the project closest to?

A. $196,446

B. $42,000

C. $6,446

D. $190,000

3. Frankin Corporation's net cash provided by operating activities was $192, its capital expenditures were $154, and its cash dividends were $27. How much was the company's free cash flow?

A. $38

B. $11

C. $373

D. $165

4. Which one of the following statements about book value per share is most correct?

A. A market price per common share that is greater than book value per common share is an indication of an overvalued stock.

B. Book value per common share is based on past transactions, whereas the market price of a share of stock mainly reflects what investors expect to happen in the future.

C. Book value per common share is the amount that would be paid to stockholders if the company were sold to another company.

D. Market price per common share usually approximates book value per common share.

7. (Ignore income taxes in this problem.) The management of Enamorado Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 5 years. The company uses a discount rate of 17% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is -$160,462. To the nearest whole dollar, how large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive?

A. $50,160

B. $32,092

C. $27,279

D. $160,462

9. (Ignore income taxes in this problem.) The management of Helberg Corporation is considering a project that would require an investment of $203,000 and would last for 6 years. The annual net operating income from the project would be $103,000, which includes depreciation of $30,000. The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. How long is the payback period of the project closest to?

A. 1.4 years

B. 1.5 years

C. 2.0 years

D. 1.7 years

11. A company anticipates incremental net income (i.e., incremental taxable income) of $50,000 in year 4 of a project. The company's tax rate is 30% and its after-tax discount rate is 12%. How much is the present value of this future cash flow closest to?

A. $35,000

B. $22,260

C. $15,000

D. $9,533

12. Erastic Corporation has $14,000 in cash, $8,000 in marketable securities, $34,000 in account receivable, $40,000 in inventories, and $42,000 in current liabilities. The corporation's current assets consist of cash, marketable securities, accounts receivable, and inventory. Which is the corporation's acidtest ratio closest to?

A. 0.81

B. 2.29

C. 1.33

D. 1.14

14. Fimbrez Corporation has provided the following data concerning an investment project that it is considering:

Initial Investment	$360,000
Annual Cash Flow	118,000	Per year
Expected life of the project	4	years
Discount Rate	12%

Which is the net present value of the project closest to?

A. $(1,516)

B. $112,000

C. $360,000

D. 358,484

17. The market price of Friden Company's common stock increased from $15 to $18. Earnings per share of common stock remained unchanged. What would happen to the company's price-earnings ratio?

A. Decrease

B. Impossible to determine

C. Remain unchanged

D. Increase

Pascarelli Corporation's inventory at the end of Year 2 was $122,000 and its inventory at the end of Year 1 was $150,000. Cost of goods sold amounted to $870,000 in Year 2. How long is the company's average sale period (turnover in days) for Year 2 closest to?

A. 51.2 days

B. 230.1 days

C. 32.3 days

D. 57.0 days