ACCT 102 Ch 11 & 13

Front

A company is considering the purchase of equipment for $270,000. Projected annual net cash flow from this equipment is $61,200 per year. The payback period is:

Back

4.4 years

Front

A disadvantage of using the payback period to compare investment alternatives is that it:

Back

ignores cash flows beyond the payback period

Front

A company buys a machine for $180,000 that has an expected life of nine years and no salvage value. The company expects an annual income of $8,550. What is the accounting rate of return?

Back

9.50%

Front

The minimum acceptable rate of return for an investment decision is called the

Back

hurdle rate

Front

What is the net present value of a machine costing $90,000 with an annual net cash flow of $33,600, a useful life of three years, and a required return of 12%?

Back

$(9,300)

Front

The payback period in years (rounded to 2 decimal places) for Project X is:

Back

2.83.

Front

The annual income amount used to calculate the accounting rate of return is: $46,100, $11,100, $12,100, $74,000, $48,950

Back

$11,100

Front

A company's sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:

Back

15%.