A company uses the net present value method to evaluate planned

Equipment is purchased at a cost of $39,000. As a result, annual cash revenues will increase by $20,000; annual cash operating expenses will increase by $7,000; straight-line depreciation is used; the asset has a ten-year life; the salvage value is $3,000. Assuming a tax bracket of 34%, determine the accounting rate of return? (round to the nearest %)

A. 13%
B. 16%
C. 27%
D. 33%

A company uses the net present value methodology in making capital expenditure decisions. In making a decision where they have to choose among two pieces of equipment, which of the following pieces of information will be considered irrelevant

A. initial cost of each machine
B. estimated life of each machine
C. MACRS Depreciation
D. Cash flow generated by each machine during the estimated life of the machine

Shirt Co. wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual net cash inflows of $30,000, have a useful life of 8 years, and an estimated salvage value of $10,000. If Shirt Co. has a required rate of return of 12%, the maximum amount they will be willing to spend for this machine is:

A. $149,040
B. $153,080
C. $198,720
D. $300,000

Co. X has gathered the following estimates:

Machine A Machine B
Cost $600,000 $600,000
Life 5 yrs 5 yrs
Net Cash Inflow:
Yr 1 i$100,000 $500,000
Yr 2 $200,000 $400,000
Yr 3 $300,000 $300,000
Yr 4 $400,000 $200,000
Yr 5 $500,000 $100,000
Co. X uses the net present value method to evaluate capital expenditures. Which of the following two machines has the higher net present value?

A. Machine A
B. Machine B
C. they are the same
D. Cannot be determined from the information provided

A company uses the net present value methodology in making capital expenditure decisions. In making a decision where they have to choose among two pieces of equipment, which of the following pieces of information will be considered irrelevant

A. initial cost of each machine
B. estimated life of each machine
C. MACRS Depreciation
D. Cash flow generated by each machine during the estimated life of the machine