7. Cardinal Company purchased a new machine for $125,000. The machine will last eight years and will be depreciated using the straight-line method. The estimated residual value of the machine is zero and should generate a yearly cash inflow of $30,000. Ignoring taxes, what is the accounting rate of return?

A. 3.65%

B. 11.50%

C. 23.00%

D. 24.00%

9. Which of the following is NOT a factor when considering the time value of money?

A. The interest rate

B. The principal amount

C. The payback period

D. The number of periods

10. The final step in the capital budgeting process is to:

A. identify potential capital investments.

B. engage in capital rationing, if necessary, to choose among alternative investments.

C. utilize decision rules when screening out undesirable investments.

D. perform post-audits after making capital investments.