33.

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,500 and will produce cash flows as follows:

End of Year	Investment
	A	B
1	$8,500	$0
2	8,500	0
3	8,500	25,500

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment A is:

$16,766.

$(15,500).

$10,000.

$(19,408).

$3,907.

32.

The following data concerns a proposed equipment purchase:

Cost	$142,100
Salvage value	$3,900
Estimated useful life	4 years
Annual net cash flows	$46,000
Depreciation method	Straight-line

The annual average investment amount used to calculate the accounting rate of return is:

rev: 06_01_2016_QC_CS-50109

$71,050

$69,100

$35,525

$73,000

$48,050

34.

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,500 and will produce cash flows as follows:

End of Year	Investment
	A	B
1	$9,500	$0
2	9,500	0
3	9,500	28,500

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment B is:

$4,239.

$(18,739).

$14,000.

$7,190.