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Ch 13 Assume that you are thinking about starting your own small business. You have made the following estimates regarding this opportunity: 1 points You
Ch 13 Assume that you are thinking about starting your own small business. You have made the following estimates regarding this opportunity: 1 points You can rent a location for your business at a cost of $36,000 per year. The equipment costs incurred to start the business would total $330,000. The equipment would have a 5-year useful life and a salvage value of $30,000. Your company's estimated sales per year would equal $350,000 and its variable cost of goods sold would be 30% of sales. Other operating costs would include $60,000 per year in salaries, $4,000 per year for insurance, $25,000 per year for utilities, and a 3% sales commission. Skipped Based on these assumptions you estimate the project's simple rate of return to be 15%. However, after further consideration, you decide to revise your estimated salaries from $60,000 to $66,600-an 11% increase This increase in salaries will cause the simple rate of return to change by how much? eBook Print Multiple Choice References It will decrease by 11%. It will decrease by 5%. O a It will decrease by 2%. It will decrease by 4%. Check my w 15 Assume that a company purchased a new machine for $20,000 that has a salvage value of $3,000 at the end of its useful life of five years. The machine is expected to save the company $6,000 a year in cash operating costs for five years. The company's discount rate is 15%. What is the net present value of this investment opportunity? 1 points Skipped Multiple Choice eBook $1,143 Print O $1.603 References O $1,903 $2,203 O
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