3 b c a B D E F G H J L M N O 1 1 Which of the following is an example of an independent project? * 2 a A bank deciding between keeping a manual check sorting process or an automated sort process. A retailer deciding between an inventory management system offered by two different vendors. 4 A manufacturing plant considering a major overhaul of an existing machine or replacing the existing machine with a new model. 5 d A hospital considering the purchase of a new MRI machine and a new cardiac monitoring system. 6 7 2 The following information pertains to an investment: Investment P240,000; Annual revenues P140,000; Annual variable costs P30,000; Annual fixed out-of-pocket costs 8 P22,000; Salvage value P54,000, Discount rate 16%; Expected life of project 3 years. Ignoring income taxes, the present value of the salvage value (rounded) is * 9 P35,500 10 b P31,346. 11 C P46,440. 12 d P34,614. 13 14 3 Donaldson Company can acquire a P650,000 machine now that will benefit the firm over the next 9 years. Annual savings in cash operating costs are expected to total P105,000 15 If the hurdle rate is 12%, the investment's net present value is: * 16 a P(21,010). 17 b P(308,855). 18 C P(90,560) 19 d none of the above 20 le P295,000 21 22 Sheet1 + Ready 130%