CHAPTER 26 NAME 10-MINUTE QUIZ 11 SECTION Physician's Pharmacy is considering the purchase of a copying machine which it will make available to custoemers at a per-copy charge. The copying machine has an initial cost of $7,500, an estimated useful life of five years, and an estimated salvage value of $500. The estimated annual revenue and expenses relating to operation of the machine are as follows Revenue Expenses other than depreciation $8,000 $5,500 All revenue will be received in cash; expenses other than depreciation will be paid in cash. Depreciation will be computed by the straight-line method Answer the following questions. If you select answer d, indicate the correct amount in the space provided. I Refer to the above data Acquisition of the copying machine is expected to increase Physician's annual net income by a $1,100. b $500. e $600. d Some other amount. 2 Refer to the above data The annual net cash flow expected from the investment in the machine is: a $1,000. b $600. $500. d $2,500. 3 Refer to the above data. The payback period on this investment is estimated at: a 1.125 years. b 7.5 years. e 3 years d None of these answers. 4 Refer to the above data. The expected rate of return on average nvestment is a 27.5%. b 33 1/3% c6096. d Some other rate 5 The net present value of the proposed investment, Refer to the above data. discounted at an annual rate of 15% and rounded to the nearest dollar (use Tables): a $528 b SI,128.50. S(1,405). Some other amount. c d Financial Copyright @ 201S McGrow Hill Education, All ights neserved. Ne reproduction or distribution without the 26-7