USE THE FOLLOWING INFORMATION FOR QUESTIONS 11 - 14:

ABC Company is considering the purchase of a new cutting machine for $150,000. The machine has an estimated life of 15 years. ABC Company intends to use straight-line depreciation with an estimated salvage value of $0.00. The annual net cash inflow is estimated to be $30,000. ABC Company has an income tax rate of 25% and a hurdle rate of 10%.

11. The Accounting Rate of Return (AROR) is equal to:

a. 8%

b. 9%

c. 10%

d. 11%

12. The Payback period is equal to:

a. 5 Years

b. 6 Years

c. 7 Years

d. 8 Years

13. The Net Present Value (NPV) is equal to:

a. $39,150

b. $40,150

c. $41,150

d. $42,150

14. The Internal Rate of Return (IRR) is equal to:

a. 13.5%

b. 14.0%

c. 14.5%

d. 15.0%

USE THE FOLLOWING INFORMATION FOR QUESTIONS 35 - 37:

ABC Company purchased an old cutting machine for $150,000 on January 1, 2010. The machine had an estimated life of 15 years. ABC Company used straight-line depreciation with an estimated salvage value of $0.00. ABC Company has an income tax rate of 25%. The old cutting machine was sold on January 1, 2013 after exactly 3 years.

35. What was the net cash inflow from the sale of the old cutting machine on January 1, 2013 when it was sold for $120,000?

a. $120,000

b. $130,000

c. $140,000

d. $150,000

36. What was the net cash inflow from the sale of the old cutting machine on January 1, 2013 when it was sold for $140,000?

a. $125,000

b. $135,000

c. $145,000

d. $155,000

37. What was the net cash inflow from the sale of the old cutting machine on January 1, 2013 when it was sold for $105,000?

a. $105,750

b. $106,750

c. $107,750

d. $108,750