Cullumber Company is considering purchasing new equipment for $333,700. It is expected that the equipment will produce net annual cash flows of $47,000 over its 10-year useful life. Annual depreciation will be $33,370. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.) Cash payback period years Which of the following is not a typical cash flow related to equipment purchase and replacement decisions? O Operating costs. O Overhaul of equipment. O Salvage value of equipment when project is complete. O Depreciation expense. Which of the following will increase the net present value of a project? An increase in the initial investment A decrease in annual cash inflows An increase in the discount rate O A decrease in the discount rate To avoid rejecting projects that actually should be accepted, 1. Intangible benefits should be ignored. 2. Conservative estimates of the intangible benefits' value should be incorporated into the NPV calculation. 3. Net present value should be calculated without regard to intangible benefits and then, if the NPV is negative, the present value of the intangible benefits should be estimated and compared to the amount of the negative NPV. 01 0 3 both 2 and 3 are correct In evaluating high-tech projects, O only tangible benefits should be considered. O only intangible benefits should be considered. O both tangible and intangible benefits should be considered. O neither tangible nor intangible benefits should be considered. If a project has a profitability index of 1.20, then the project's internal rate of return is O equal to the discount rate. O less than the discount rate. O greater than the discount rate. O equal to 20%.Whispering Winds, Inc. is considering purchasing equipment costing $84000 with a 6-year useful life.The equipment will provide annual cost savings of $21000 and will be depreciated straightline over its useful life with no salvage value. Whispering Winds requires a 10% rate of return. Present Value of an Annuity of 1 Period g 3; 10% 11% 12% 15 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate net present value of this investment? 0 $42000 0 $7455 0 $4850 0 $10206 Sheridan, Inc. is considering purchasing equipment costing $40000 with a 6-year useful life. The equipment will provide annual cost savings of $9730 and will be depreciated straightline over its useful life with no salvage value. Sheridan requires a 10% rate of return. Present Value of an Annuity of 1 Period 816 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate internal rate of return for this investment? 0 9% O 10% O 11% O 12% In using the internal rate of return method, the internal rate of return factor was 4 and the equal annual cash inows were $22000. The initial investment in the project must have been 0 $22000. 0 $5500. 0 $88000. O $44000. A project that cost $51000 has a useful life of 5 years and a salvage value of $3000. The internal rate of return is 12% and the annual rate of return is 18%. The annual net income is 0 $4860. 0 $4320. 0 $3240. 0 $2880. Crane Inc. is considering an investment project with the following characteristics: internal rate of return factor 3.930; net income $50000; net annual cash inow $140000; depreciation expense $88000. What was the amount of the initial investment? 0 $550200 0 $542340 0 $196500 0 Cannot be determined from data given Selected transactions for the Ecker Company are listed below. Classify each transaction as either an operating activity, an investing activity, a nancing activity, or a noncash investing and nancing activity. 1. Collected accounts receivable. v 2. Declared and paid dividends on common stock. v 3. Sold long-term investments for cash. v 4. Issued stock for equipment. v 5. Repaid ve year note payable. v 6. Paid employee wages. v 7. Converted bonds payable to common stock. v 8. Acquired long-term investment with cash. v 9. Sold buildings and equipment for cash. v 10. Sold merchandise to customers. V Assume the indirect method is used to compute cash flows from operating activities. For each item listed below, indicate the effect on net income in arriving at cash ows from operating activities by choosing one of the following code letters. Cash Flows From Operating Activities Code Add to Net Income Add Deduct from Net Income Deduct Code 1. Increase in accounts receivable V 2. Increase in inventory v 3. Decrease in prepaid expenses v 4. Decrease in accounts payable v 5. Increase in accrued liabilities v 6. Increase in income taxes payable v 7. Depreciation expense V 8. Loss on sale of investment v 9. Gain on disposalofequipment V 10. Amortization expense v Sunland Company prepared the tabulation below at December 31, 2022. Net Income $307,800 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $32,800 Decrease in accounts receivable $50,800 Increase in inventory $12,800 Decrease in accounts payable $9,400 Increase in income taxes payable $2,300 Loss on sale of land $5,800 Net cash provided (used) by operating activities Show how each item should be reported in the statement of cash flows. (Show amounts that decrease cash flow with either a - sign e.g. 15,000 or in parenthesis e.g. (15,000).) SUNLAND COMPANY Partial Statement of Cash Flows V Adjustments to reconcile net income to v vThe following information is available for Sheridan Company: Receipts from customers $217,100 Dividends from stock investments 4,400 Proceeds from sale of equipment 18,700 Proceeds from issuance of stock 90,700 Payments for inventory 100,700 Payments for operating expenses 78,700 Interest paid 6,700 Taxes paid 4,700 Dividends paid 20,700 Based on the preceding information, compute the net cash provided by operating activities. Net cash provided by operating activities 55 Accounts receivable arising from sales to customers amounted to $81000 and $75000 at the beginning and end of the year. respectively. Net income reported on the income statement for the year was $301000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the indirect statement of cash ows is O $301000. O $307000. 0 $226000. 0 $294000. Shefeld Company is considering investing in new equipment that will cost $1,425,000 with a 10-year useful life. The new equipment is expected to produce annual net income of $42,600 over its useful life, Depreciation expense. using the straight-line rate, is $142,500 peryeac Compute the cash payback period. (Round answer to 1 decimal place, 9.3. 15.2.) Cash payback period years Indigo Company has hired a consultant to propose a way to increase the company's revenues. The consultant has evaluated two mutually exclusive projects with the following information provided for each: Project Turtle Project Snake Capital investment $1,210,000 $730,000 Annual cash flows 201,000 126,000 Estimated useful life 10 years 10 years Indigo Company uses a discount rate of 9% to evaluate both projects. Click here to view PV tables. (3) Calculate the net present value of both projects. (Use the above table.) (Round factor values to 5 decimal places, eg. 1.25124 and nal answers to Odecimal places, 9.3. 5.275.) Project Turtle Project Snake Net present value $ $ Wildhorse Inc. is contemplating a capital project with a cost of $ 142000. The project will generate net cash flows of $42000 for year 1, $54000 for year 2 and $65000 for year 3. The asset has a salvage value of $11000 and straight-line depreciation will be used.The company's required rate of return is 10%. Present Value PV of an Annuity Y_e;r_ of 1 at 10% 9f 1 at 10% 1 0.909 0.909 2 0.826 1.736 3 0.751 2.487 O unacceptable because it earns a rate less than 10%. O acceptable because it has a positive NPV. O acceptable because it has a return of greater than 10%. O unacceptable because it has a zero NPV. Ivanhoe Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company's cost of capital is 7%. Option A Option B Initial cost $177,000 $268,000 Annual cash inflows $72,000 $81,700 Annual cash outflows $28,500 $25,600 Cost to rebuild (end of year 4) $51,000 $0 Salvage value $0 $7,400 Estimated useful life 7 years 7 years Click here to view the factor table. (a) Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each option. (Hint: To solve for internal rate of return, experiment with alternative discount rates to arrive at a net present value of zero.) (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answers for present value and IRR to O decimal places, e.g. 125 and round profitability index to 2 decimal places, e.g. 12.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net Present Value Profitability Index Internal Rate of Return Option A $ % Option B $