Multiple Choice Questions

1. Levi Strauss has some of its jeans stone-washed under a contract with independent U.S. Garment Corp. If U.S. Garment's operating cost per machine is $22,000 for year 1 and increases by a constant $1000 per year through year 5, what is the equivalent uniform annual cost per machine for the 5 years at an interest rate of 8% per year?

(a) $23,850

(b) $24,650

(c) $25,930

(d) Over $26,000

2. The F/G factor values can be derived by multiplying:

(a). (P/F) and (A/G) factor values

(b). (F/P) and (A/G) factor values

(c). (P/F) and (P/G) factor values

(d) (F/P) and (P/G) factor values

3. At i = 4% per year, A for years 1 through 6 of the cash fl ows shown below is closest to:

(a) $300

(b) $560

(c) $800

(d) $1040

4. The value of the factor (P/F, i, 10) can be found by getting the factor values for (P/F, i, 4) and (P/F, i, 6) and:
(a) Adding the values for (P/F, i, 4) and (P/F, i, 6)
(b) Multiplying the values for (P/F, i, 4) and (P/F, i, 6)
(c) Dividing the value for (P/F, i, 6) by the value for (P/F, i, 4)
(d) None of theabove

Transcribed Image Text:

0 1 234 5 6 Years b Y ears S300 $400 $500 $600 700 $800