Question 49

As the volume of activity decreases within the relevant range, the fixed cost per unit

remains the same.

decreases.

increases at first, then decreases.

increases.

Question 50

Which of the following capital investment models would be preferred when choosing among mutually exclusive alternatives?

internal rate of return (IRR)

accounting rate of return

payback period

net present value (NPV) with the use of a project profitability index

Question 47

A company is considering the purchase of a new machine for $160,000. The machine would generate an annual cash flow before taxes of $62,588 for four years. At the end of four years, the machine would have no salvage value. The company's required rate of return is 12 percent. The company uses straight-line depreciation with no mid-year convention and has a 40 percent tax rate.

What is the internal rate of return for the machine (rounded to the nearest percent) with income tax considerations included?

below 12%

between 16 and 18%

between 14 and 16%

between 12 and 14%

Question 46

An example of a relevant cost is a (an):

full cost.

past cost.

cost driver.

opportunity cost.