(Ignore income taxes in this problem.) Peter wants to buy a computer which he expects to save him $8,500 each year in bookkeeping costs. The computer will last for five years, and at the end of five years it will have no salvage value. If Peter's required rate of return is 11%, what is the maximum price Peter should be willing to pay for the computer now?

Click here to viewExhibit 8B-1andExhibit 8B-2to determine the appropriate discount factor(s) using tables.

$42,500

$31,416

$28,336

$27,826

8

Which of the following benefits could an organization reasonably expect from an effective budget program?

	Increased employee motivation	Uncover potential bottlenecks
(A)	Yes	Yes
(B)	Yes	No
(C)	No	Yes
(D)	No	No

Option AOption BOption COption D

10

All of Porter Corporation's sales are on account. Seventy percent of the credit sales are collected in the month of sale, 15% in the month following sale, and 10% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data for the company:

	January	February	March	April
Total sales	$428,000	$602,000	$676,000	$860,000

Cash receipts in April are expected to be:

$602,000

$703,400

$763,600

$161,600