Number 16)

Number 18)

Pique Corporation wants to purchase a new machine for $294,000. Management predicts that the machine can produce sales of $203,000 each year for the next 4 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $68,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Pique's combined income tax rate is 20%. Management requires a minimum after-tax rate of return of 9% on all investments. What is the payback period for the new machine (rounded to nearest one-tenth of a year)? (Assume that the cash inflows occur evenly throughout the year.) Multiple Choice 2.9 years. 2.4 years. 1.8 years. 2.0 years. 3.5 years. A widely used approach that managers use to recognize uncertainty about individual items and to obtain an immediate financial estimate of the financial consequences of possible prediction errors is: Multiple Choice Exponential distribution analysis. Learning curve analysis. Capital budgeting analysis. O Expected value analysis. O Sensitivity analysis