Multiple Choice Question 77

Kingbird is contemplating a capital project costing $31500. The project will provide annual cost savings of $15800 for 3 years and have a salvage value of $4000. The company's required rate of return is 10%. The company uses straight-line depreciation.

Present ValuePV of an AnnuityYearof 1 at 10%of 1 at 10%1.909.9092.8261.7363.7512.487

This project is

acceptable because it has a positive NPV.

acceptable because it has zero NPV.

unacceptable because it has a negative NPV.

unacceptable because it earns a rate less than 10%.

Multiple Choice Question 146

A project that cost $66000 has a useful life of 5 years and a salvage value of $3000. The internal rate of return is 12% and the annual rate of return is 18%. The amount of the annual net income is

$3780.

$6210.

$5670.

$4140.

Multiple Choice Question 140

Skysong Company is considering buying equipment for $300000 with a useful life of 5 years and an estimated salvage value of $16000. If annual expected income is $28000, the denominator in computing the annual rate of return is

$150000.

$300000.

$158000.

$316000.