13.You are considering the following 2 mutually exclusive projects. Using the equivalent annual annuity method and a cost of capital of 10%, which project should be selected? (Round to nearest $)

YEAR______ PROJECT A_______________PROJECT B

_____________Cash Flow________________Cash Flow

0-------------------(20,000)-----------------------------(20,000)

1--------------------15,000--------------------------------5,000

2---------------------20,000------------------------------10,000

3------------------------------------------------------------15,000

4------------------------------------------------------------50,000

a. Project B because of an EAA of $12,060

b. Project A because of an EAA of $5,857

c. Project B because of an EAA of $38,320

d. Project A because of an EAA of $10,165

14.Which of the following is a cash flow consideration in evaluating a proposed capital project?

a. Incremental overhead effect

b. Basic overheads

c. Financing costs

d. All the above

15.Segwick Corp is estimating sales in Year 1 of $250,000 and cost of goods sold of $100,000. Given the following assumptions for Year 1, what is the projected change in working capital for that year? (Round to nearest $)

Initial (Year 0) Working Capital---------------$10,000

Cash---------------------------------------------------2% of sales

Accounts Receivable----------------------------10 days outstanding (360-day year)

Inventory--------------------------------------------Three months x cost of goods sold

Accounts Payable--------------------------------50% of inventory

a.($14,444)

b. ($24,444)

c. ($34,444)

d. ($44,444)