Question 21 3.33 pts Crow Corporation is considering an investment in a project that has an internal rate of return of 20%. The project has an 8-year useful life but has no salvage value. Cash inflows from this project are $100.000 per year in each of the 8 years. Crow uses a 16% discount rate to make capital budgeting decisions. What is the net present value of this project? O $55,831 $50,700 O $15.464 $5.215 Question 22 3.33 pts Peloton Enterprises has two product lines, road bikes and mountain bikes. Here is the most recent income statement prepared by Peloton's accountant, broken down by product line: Sales revenue Variable costs Contribution margin Fixed costs Operating income Road bikes $ 310,000 (235,000) 75,000 (44.000) $31,000 Mountain bikes $ 163,000 (105,000) 58,000 (31,000) $27,000 Total $ 473,000 (340,000) 133,000 (75,000) $58,000 Peloton plans to discontinue the production and sale of road bikes and use the resulting freed-up capacity to triple the production and sale of mountain bikes, from 1.000 units per year to 3,000 units per year. All fixed costs are common fixed costs. If Peloton discontinues the road bikes product line, what would be the incremental effect on Peloton's operating income? Increase by $41.000 Increase by $99,000 Decrease by $17.000 Decrease by $34.000 > Question 23 3,33 pts Gobbler Pie Company produces five types of frozen pies. Each type of pie filling requires a certain number of hours in a large commercial mixer, but Gobbler owns only one mixer. Consequently, the limited number of mixer hours is a constraint on production. To maximize its operating income, Gobbler should emphasize production of the type of pie that: Generates the highest contribution margin per pie. Uses the least amount of mixer time per dollar of related sales revenue. Uses the least amount of mixer time per pie produced. o Generates the highest contribution margin per mixer hour. Question 24 3.33 pts Whippet Shoes Inc. has three product lines: Running Shoes, Hiking Shoes and Walking Shoes. The CEO of Whippet would like to quantity the effect of discontinuing the Walking Shoe product line on the company's future profits. The best number for the CEO to look at to determine the effect of eliminating this product line on the operating income of the company as a whole would be the Walking Shoe product line's Sales less variable costs. Sales less the sum of variable costs and an allocated portion of common fixed costs. Sales less the sum of variable costs and traceable fixed costs. Sales less the sum of cost of goods sold and traceable fixed costs. Sales less the sum of variable costs, traceable fixed costs, and an allocated portion of common fixed costs
