Problem - Internal Rate of Return, Continued. Circle one correct letter. Each correct answeris worth point(s). An equipment purchase has following factors: $60,000 Purchase Price Useful Life 6 years $14,600 Annual Cost Savings Salvage Value Depreciation Method o Straight-Line Present Value of an Annuity of 1 9% 10% 12% 8% 15% Period 6 4.623 4.486 4.355 4.111 3.784 2. What is the approximate internal rate of return for this investment? a 9% b. 10% c. 11% d. 12% *** Extra Credit ***** Circle one correct letter. Each correct answer is worth_ points) 1. Capital budgeting is the process a used in sell or process further decisions. b. of determining how much capital stock to issue. c of making capital expenditure decisions. d of eliminating unprofitable productlines. 2. Which of the following is not a capital budgeting decision? a Constructing new studios b. Replacing old equipment c Scrapping obsolete inventory d Remodeling an office building 3. Allowance for spoilage is part of the direct a materials price standard. b. labor price standard. c materials quantity standard. d labor quantity standard. 4. Labor efficiency is measured by the a materials quantity variance. b. total labor variance. clabor quantity variance. d labor rate variance. 5. An unfavorable labor quantity variance may be caused by a paying workers higher wages than expected. b. misallocation of workers. c worker fatigue or carelessness. d higher pay rates mandated by union contracts. Tala