Multiple Choice Question 78

Bramble Corp. has an 8% required rate of return. It's considering a project that would provide annual cost savings of $54000 for 5 years. The most that Johnson would be willing to spend on this project is

Year Present Value of 1 at 8% PV of an Annuity of 1 at 8%

1 0.926 0.926

2 0.857 1.783

3 0.794 2.577

4 0.735 3.312

5 0.681 3.993

$215622.

$36774.

$135983.

$178848.

Multiple Choice Question 48

If a payback period for a project is greater than its expected useful life, the

project will always be profitable.

entire initial investment will not be recovered.

project would only be acceptable if the company's cost of capital was low.

project's return will always exceed the company's cost of capital.