Question 6

0 out of 1 points

Donald's Hardware paid a contractor $40,000 to expand the business. The investment increased annual cash inflows by $8,000 per year for a six-year period. Donald's has a desired rate of return of 10%. The net present value of this investment is which of the following? (if necessary round to the nearest whole dollar)

Answers:	A) ($5,160)
	B) ($40,000)
	C) $34,842
	D) $48,000

Tharpe Company has two investment opportunities. A cash flow schedule for the investments is provided below:

Year	Investment A	Investment B
0	($5,000)	($6,000)
1	2,000	3,000
2	2,000	2,000
3	2,000	2,000
4	2,000	1,000

Which of the following techniques would be most appropriate for making this investment decision?

Answers:	A) Payback technique
	B) Present value index
	C) Net present value technique
	D) None of the above

Question 10

0 out of 1 points

An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (round your answer to the nearest whole dollar)

Answers:	A) negative net present value of $25,000
	B) negative net present value of $2,923
	C) positive net present value of $20,557
	D) positive net present value of $1,520

Question 13

0 out of 1 points

The Kingston Company has an opportunity to purchase an asset that will cost the company $60,000. The asset is expected to add $19,000 per year to the company's cash flow. Assuming that the asset has a five-year useful life and a $10,000 salvage value, the unadjusted rate of return based on the average investment will be (rounded to the nearest %)

Answers:	26%
	13%
	54%
	32%