Poke Inc, is considering automating its production line at a cost of $40,000 to acquire the necessary equipment. The annual cost savings are expected to be $8,000 for 14 years. The firm requires a 20% rate of return. Ignore income taxes.

1. What is the internal rate of return on this investment?

2. The net present value for this investment is

3. Early, Inc. has chosen four potential investment projects. Listed below are some relevant data on these projects:

Use the profitability index to rank these investments in terms of preference.

4. A value chain is the sequence of business processes in which

5. An organization’s value chain can incorporate its I. Own customers, II. Own suppliers, III. Customers’ customers, IV. Suppliers’ suppliers

6. Implementing a wireless network to reduce non-value added paperwork and improve inventory tracking would result most directly from:

a. Target costing

b. Kaizen costing

c. Value chain analysis

d. Life cycle budgeting

7. Which of the following activities is not typically considered to be part of a manufacturing organization’s value chain?

a. Making journal entries

b. Handling customer complaints

c. Designing and engineering new products

d. Manufacturing products

8. Which of the following activities is unique to a manufacturing organization’s value chain?

9. Which of the following immediately follows product and process design in the typical manufacturing value chain?

a. Research and development

b. Supplier and raw material management

c. Distribution management

d. Marketing and sales

10. Managers often break activities into four groups for value chain analysis. Which of the following is not an activity category among those four groups?

a. Unnecessary activities that cannot be eliminated

b. Necessary activities that could be changed to improve the process

c. Necessary activities that cannot be improved upon at this time

d. Unnecessary activities that can be eliminated quickly

Transcribed Image Text:

Project Investment Net Present Value 1 $125,000 $62,500 2 150,000 45,000 75,000 52,500 4 112,500 45,000 3. Project Investment Net Present Value 1 $125,000 $62,500 2 150,000 45,000 75,000 52,500 4 112,500 45,000 3.

Answer rating: 100% (QA)

Solution At IRR NPV0 PI1 IRR R1NPV 1R1R2NPV1NPV2 Here R1 20 R215 Npv1 for14 years PVAIF20 for 14 years800040000 NPV1 46118000400003112 NPV2 PVAIF15 Fo... View the full answer