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20. PVA Comparing net present value and internal rate of return methods of evaluation A) always results in the same ranking of projects B) always results in the same accept-reject decision C) may give different accept-reject decisions D) is only necessary on independent projects 21. Which of the following would be used in the computation of an initial investment? A) the profits from the new investment B) the annual after-tax inflow expected from the investment C) the initial purchase price of the investment D) the historic cost of the existing investment 22. An important cash inflow in the analysis of initial cash flows for a replacement project is A) the cost of the new asset B) installation cost C) the sale value of the old asset D) taxes 23. In evaluating the initial investment for a capital budgeting project, A) a decrease in net working capital is considered a cash outflow B) an increase in net working capital is considered a cash outflow C) net working capital does not have to be considered D) an increase in net working capital is considered a cash inflow MACRS RATE 24. The book value of an asset is equal to the Recovery year 3 years 5 years 7 years 10 years A) depreciated value plus recaptured depreciation 1 33% 20% 14% 10% B) fair market value minus the accounting value 2 4532 C) original purchase price plus annual depreciation expense 3 15 19 D) original purchase price minus accumulated depreciation 4 1 12 5 6 5 Le logo Nalalalalalalis 9 10 25. A corporation is selling an existing asset for $21,000. The asset, when purchased, cost. $10,000, was being depreciated under MACRS using a 7-year recovery period, and has been depreciated for five full years. If the assumed tax rate is 40 percent on ordinary income and capital gains, the tax effect of this transaction is A) SO tax liability B) $7,520 tax liability C) $4,400 tax liability D) 57,720 tax liability