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A company has a minimum required rate of return of 10%. It is considering investing in a project that costs $50,000 and is expected to
A company has a minimum required rate of return of 10%. It is considering investing in a project that costs $50,000 and is expected to generate cash in of $25,000 at the end of each year for three years. The profitability index for this project is 1).80. 2) 1.00. 3) 1.24. 4) 1.27. Colaw Company is considering buying equipment for $240,000 with a useful life of five years and an estimated salvage value of $12,000. If annual expected income is $21,000, the denominator in computing the annual rate of return is 1) $240,000. 2) $120,000. 3) $126,000 4) $252,000. A company is considering purchasing a machine that costs $400,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $100,000 and annual operating expenses, expense exclusive of depreciation expense are expected to be $30,000. The straight line method of depreciation would be exclusive used. The cash payback period on the machine is
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