Q1:

Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows:

Year		Net Income		Net Cash Flow
1		$75,000		$285,000
2		100,000		290,000
3		109,000		190,000
4		36,000		125,000
		$320,000		$890,000

The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.

Required:

Determine the average rate of return on investment, including the effect of depreciation on the investment. Round your answer to one decimal place. %

Q2:

A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $100,000. The present value of the future cash flows at the company's desired rate of return is $100,000. The IRR on the project is 12%. Which of the following statements is true?

The project should not be accepted because the net present value is negative.

The desired rate of return used to calculate the present value of the future cash flows is more than 12%.

The desired rate of return used to calculate the present value of the future cash flows is less than 12%.

The desired rate of return used to calculate the present value of the future cash flows is equal to 12%.

Q3:

alculator

The management of California Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

Year	Income from Operations		Net Cash Flow
1	$100,000		$180,000
2	40,000		120,000
3	20,000		100,000
4	10,000		90,000
5	10,000		90,000

The present value index for this investment is

a.1.138

b..0785

c.1.274

d.1.450

Q4:

Select the entry that would properly record the purchase of Materials on account in a Job Order Cost System during the month.

A.Materials Cash

B.Materials Accounts Payable

C.Accounts Payable Materials

D.Work in Process Accounts Payable