Question 3

A piece of equipment costs $34,000, and is expected to generate $9,000 of annual cash revenues and $1,500 of annual cash expenses. The disposal value at the end of the estimated 12-year life is $3,000. Ignoring income taxes, the payback period is:

Multiple Choice

None of these options is correct.

7.16 years.

4.53 years.

4.13 years.

3.78 years.

Question 4

Miracle Green Corporation operates two garden supply stores: A and B. The following information relates to store A:

Sales revenue $986,666 Variable operating expenses 472,666 Fixed expenses: Traceable to A and controllable by A 315,666 Traceable to A and controllable by others 128,666 Cafeteria 30 Human Resources 32 Machining 70 Assembly 180The following information pertains to Travis Concrete: Sales revenue $2,400,000 Gross margin 780,090 Income 108,090 Invested capital 630,090 The company's Imputed Interest rate Is 7%. The residual Income Is