
Cash outlays for capital assets include all the following EXCEPT:
The original purchase price
The annual operating costs
The salvage value
All of the above
1 points
QUESTION 2

Which of the following capital budgeting methods ignores the time value of money?
Internal rate of return
Net present value method
Payback method
All of the above consider the time value of money
1 points
QUESTION 3

SkiTime Photos plans to spend $74,400 for a new machine, which is expected to generate cash inflows of $18,600 per year over its useful life of 10 years. The new machine will be depreciated on a straightline basis over 10 years with no salvage value. What is the payback period?
4 years
5 years
8 years
10 years
1 points
QUESTION 4

When would a project be rejected under the NPV method?
If its net present value is less than zero
If its net present value is equal to zero
If its net present value is greater than zero
Not enough information is available
1 points
QUESTION 5

Clarke Company purchased equipment for $100,000 that is expected to generate cash inflows from operations of $30,000 in each of the next 5 years. The machine will be depreciated on a straightline basis with no salvage value. Assume the following present value factors and determine the net present value of the investment by Clark Company

periodPV of $ @12%PV of an Annuity of $1 at 12% 10.89290.892920.79721.690130.71182.401840.63553.037350.55743.6048