QUESTION 14

Suppose a company has two mutually exclusive projects, both of which are three years in length. Project A has an initial outlay of $9,000 and has expected cash flows of $3,000 in year 1, $3,000 in year 2, and $4,000 in year 3. Project B has an initial outlay of $8,000 and has expected cash flows of $2,000 in year 1, $3,000 in year 2, and $6,000 in year 3. The required rate of return is 11% for projects at this company. What is the net present value for the best project? (Answer to the nearest dollar.)

QUESTION 23

A company is considering a 5-year project that opens a new product line and requires an initial outlay of $78,000. The assumed selling price is $93 per unit, and the variable cost is $66 per unit. Fixed costs not including depreciation are $16,000 per year. Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 13% per year, what is the accounting break-even point? (Answer to the nearest whole unit.)