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Use this information for River Corporation to answer the questions that follow. The management of River Corporation is considering the purchase of a new machine
Use this information for River Corporation to answer the questions that follow. The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Income from Net Cash Year Operations Flow $20,000 $95.000 20,000 95,000 20,000 95,000 20,000 95,000 20,000 95,000 min 9. The cash payback period for this investment is a. 4 years b. 5 years c. 20 years d. 3 years 10. The average rate of return for this investment is a. 5% 6. 10.5% c. 25% d. 15% 11. The net present value for this investment is a. $20,140 b. S(20,140) c. $19,875 d. S(19,875)
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