23.

You are considering two independent projects with the following cash flows. The required return for both projects is 10%. Given this information, which one of the following statements is correct assuming you have sufficient funds to invest in both if needed?

Year Project A Project B

0 -$900,000 -$125,000

1 $350,000 $ 55,000

2 $410,000 $ 80,000

3 $450,000 $ 80,000

Group of answer choices

You should accept both projects since they are both acceptable based on NPV

You should accept project A because it has the higher NPV and you can not accept both.

You should accept project A because it has the lower NPV and reject project B

You should accept project B because it has the higher IRR and reject project A

You should accept project B since it has the higher IRR and reject project A because you can not accept both projects.

24.

La Conner Co-op is considering the following two mutually exclusive projects. Which project(s) should be recommended?

Project A Project B

Year Cash Flow Year Cash Flow

0 -$65,000 0 -$80,000

1 $19,000 1 $10,000

2 $58,000 2 $10,000

3 $11,000 3 $92,000

Required rate of return:

10 percent (for A) 13 percent (for B)

Group of answer choices

accept project A and reject project B.

accept project B and reject project A.

accept both project A and project B.

reject both project A and project B.

26.

Rosario Inc. just purchased some equipment at a cost of $650,000. What is the proper method for computing the depreciation expense for year 4 if the equipment is classified as 5-year property for MACRS?

The MACRS schedule has the following depreciation rates for a 5-year asset: (year 1 to 6) 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76% respectively.

Group of answer choices

$650,000 * .1152

$650,000 * (1-.20) *(1-.32) * (1-.192)

$650,000 * (1-.1152)

$650,000 * (1-.20) * (1-.32) *(1-.192)*.1152

$650,000 * (1-.20) *(1-.32)*(1-.192)