Question Content Area

$1.$ The amount of the estimated average annual income for a proposed investment of $$80,000$ in a fixed asset, giving effect to depreciation $($straight$-$line method$),$ with a useful life of $4$ years, no residual value, and an expected total income yield of $$20,600,$ is

a$.$ $$19,400$

b$.$ $$5,150$

c$.$ $$20,600$

d$.$ $$20,000$ Question Content Area

$2.$In capital rationing, alternative proposals are initially screened for minimum standards using which of the following two evaluation methods?

a$.$ internal rate of return method and net present value method

b$.$ average rate of return method and net present value method

c$.$ net present value method and cash payback method

d$.$ cash payback method and average rate of return method The expected average rate of return for a proposed investment of $$4,220,000$ in a $3.$fixed asset, using straight$-$line depreciation, a useful life of $20$ years, no residual value, and an expected total income of $$12,660,000$ over the $20$ years, is $($round to two decimal places$)$

a$.30\mathrm{.}00\%$

b$.60\mathrm{.}00\%$

c$.1\mathrm{.}50\%$

d$.15\mathrm{.}00\%$ Question Content Area

$4.$The production department is proposing the purchase of an automatic insertion machine. It has identified $3$ machines, each with an estimated life of $10$ years. Which machine offers the best internal rate of return?

$5.$ Line Item Description Machine A Machine B Machine C

Annual net cash flows $$50,000$ $$40,000$ $$75,000$

Average investment $250,000300,000500,000$

a$.$ Machine B only

b$.$ Machine C only

c$.$ Machine A only

d$.$ Machines A and B Question Content Area

$6.$ Two managerial accounting tools useful in considering the uncertainty of estimates are

a$.$ sensitivity analysis and capital rationing

b$.$ capital rationing and expected value analysis

c$.$ sensitivity analysis and expected value analysis

d$.$ net present value method and expected value analysis