Cash outlays for capital asset

  1. 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

  1. 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

  1. 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 straight-line 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

  1. 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

  1. 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 straight-line basis with no salvage value. Assume the following present value factors and determine the net present value of the investment by Clark Company

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

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