Blink of an Eye Company is evaluating a 5-year project that will provide cash flows of $33,300, $49,830, $61,970, $59,600, and $42,520, respectively. The project has an initial cost of $141,760 and the required return is 7.7 percent. What is the project's NPV?

$29,740.23

$21,987.21

$55,366.39

$19,988.37

$23,986.01

12

121

Rossiter Restaurants is analyzing a project that requires $180,000 of fixed assets. When the project ends, those assets are expected to have an aftertax salvage value of $45,000. How is the $45,000 salvage value handled when computing the net present value of the project?

Reduction in the cash outflow at Time 0

Cash inflow in the final year of the project

Cash outflow in the final year of the project

Cash inflow prorated over the life of the project

Excluded from the net present value calculation

13

131

There is a project with the following cash flows :

Year	Cash Flow
0	$26,900
1	7,800
2	8,100
3	7,500
4	5,900

What is the payback period?

4.00 years

3.85 years

3.59 years

3.76 years

2.53 years

14

141

A project has a discounted payback period that is equal to the required payback period. Given this, the project:

will not be acceptable under the payback rule.

must have a profitability index that is equal to or greater than 1.0.

must have a zero net present value.

must have an internal rate of return equal to the required return.

will still be acceptable if the discount rate is increased.

15

151

Mountain Frost is considering a new project with an initial cost of $295,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $21,800,$22,700, $24,600, and $18,700,respectively. What is the average accounting return?

13.64%

14.88%

11.16%

7.44%

15.94%