20.

You are considering an investment with the following cash flows. If the required rate of return for this investment is 10 percent, should you accept it based solely on the internal rate of return rule? Why or why not?

Year Cash Flow

0 -$12,000

1 $ 6,500

2 $ 9,000

3 -$ 1,500

Group of answer choices

no; because the IRR is less than the required return

no; because the IRR is a negative rate of return

yes; because the IRR is a positive rate of return

You can not apply the IRR rule in this case because there may be multiple IRRs.

yes; because the IRR exceeds the required return

22.

Which of the following statements regarding the discounted payback period is correct?

Group of answer choices

Does not require an arbitrary cutoff point

This method will yield a shorter payoff period than that the regular payoff method.

Incorporate the time value of money

Takes consideration of cash flows beyond the cutoff date

29.

Chuckanut Corp. acquired some equipment three years ago for $26,000. The equipment is classified as 5-year property for MACRS. The firm is considering selling these assets now for a market price of $18,000. What is the net cash flow from the salvage value if the tax rate is 21 percent?

MACRS 5-year property

Year Rate

1 20.00%

2 32.00%

3 19.20%

4 11.52%

5 11.52%

6 5.76%

Group of answer choices

$16,358.88

$14,655.46

$14,220.00

$18,904.80

$15,308.64