Multiple Choice Question 56

Novak Company has identified that the cost of a new computer will be $40000, but with the use of the new computer, net income will increase by $7000 a year. If depreciation expense is $3000 a year, the cash payback period is:

A. 4.0 years.

B. 5.7 years.

C. 10.0 years.

D. 13.3 years.

Multiple Choice Question 48

If a payback period for a project is greater than its expected useful life, the

A. project will always be profitable.

B. entire initial investment will not be recovered.

C. project would only be acceptable if the company's cost of capital was low.

D. project's return will always exceed the company's cost of capital.

Multiple Choice Question 62

If a company's required rate of return is 10% and, in using the net present value method, a project's net present value is zero, this indicates that the

A. project earns a rate of return of 0%.

B. project's rate of return exceeds 10%.

C. project's rate of return is less than the minimum rate required.

D. project earns a rate of return of 10%.

Multiple Choice Question 98

A project with an initial investment of $42000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is

A. $42000.

B. $52038.

C. $47040.

D. $33898.