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Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $210,000 and would have
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $210,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $32,000 per year to operate and maintain, but would save $65,000 per year in labor and other costs. The old machine can be sold now for scrap for $21,000. The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 5.71% 30.95% 12.70% 6.35% Eddie Corporation is considering the following three investment projects (Ignore income taxes.): Investment required Present value of cash inflows Project C Project D Project E $11,200 $43,000 $88,000 $11,830 $50,990 $98,560 The profitability index of investment project D is closest to: Multiple Choice 0.19 1.19 0.81 0.16 Two products, QI and VH, emerge from a joint process. Product QI has been allocated $23,300 of the total joint costs of $44,000. A total of 3,000 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $11,000 and then sold for $13 per unit. If product Ql is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split- off point? Multiple Choice O ($32,300) $(5,000) O $28,000 ($18,300)
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