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: 5.7 years. 13.3 years. 4.0 years. 10.0 years. Sunland Company had an investment which cost $100000 and had a salvage value at the end of its useful life of zero. If Mussina's expected annual net income is $30000, the annual rate of return is: 30.00096. 12.00096. 75.00096. 60.00096. A company is considering purchasing factory equipment that costs $480000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $120600 and annual operating expenses exclusive of depreciation expense are expected to be $39000. The straight- line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is 4.596. 9.0%. 17.0%. 34.0%. A project with an initial investment of $90000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is $111510. $90000. $72639. $100300. A project with a profitability index of 1.156 also has net cash flows with a present value of $62424. The project's internal rate of return was 10%. The initial investment was $59400. $54000. $56182. $72162. |