Which of the following could not be the appropriate method used in evaluating pr

Question

Which of the following could not be the appropriate method used in evaluating proposed capital investments Question 1 options: Net present value method Payback period method The carrying value of the department's equipment Accounting rate of return method Save Question 2 (1 point) The financing structure of Taylor communications is as follows: Source of Capital Proportion of Capital Cost of Capital Debt financing, $300,000 30% 6% Preferred stock, $100,000 10% 8% Common stock, $400,000 40% 12% Retained earnings, $200,000 20% 12% The weighted cost of debt is Question 2 options: 2.4% 4.8% .8% 1.8% Save Question 3 (1 point) If an equipment replacement decision would not affect revenue, its benefits could still be measured by analyzing its Question 3 options: cost savings. net cash flows. effect on net income. net cash outflows. Save Question 4 (1 point) Annual net cash flows are defined as Question 4 options: annual cash inflows minus annual cash outflows. annual cash inflows minus annual cash outflows minus depreciation expense. annual revenues minus expenses. annual cash inflows minus capital investment. Save Question 5 (1 point) What role do marketing specialists play in capital investment analysis? Question 5 options: They predict sales trends and new product demands. They provide estimates as to how much money can be spent on capital facilities. They supply a target cost of capital. They designate the desired rate of return. Save Question 6 (1 point) Chicago Co. is interested in purchasing a machine that would improve its operational efficiency. The cost is $200,000 with an estimated residual value of $20,000 and a useful life of eight years. Cash inflows are expected to increase by $40,000 a year. The company's minimum rate of return is 10 percent. The present value of $1 for eight years at 10 percent is 0.467, and the present value of an annuity of $1 at 10 percent and eight years is 5.335. The net present value of the project is Question 6 options: $74,520. $120,100. $93,400. $22,740. Save Question 7 (1 point) The payback period method measures Question 7 options: the profitability of an investment. the cash flows from an investment. how quickly investment dollars may be recovered. the economic life of an investment. Save Question 8 (1 point) Seattle, Inc., is contemplating a project that costs $180,000. Expectations are that annual cash revenues will be $70,000 and annual expenses (including depreciation) will total $30,000. The project has a six-year useful life and a residual value of $30,000. Assume Seattle Inc. uses straight line method of depreciation. The project's payback period is Question 8 options: 2.31 years. 2.77 years. 2.14 years. 2.57 years. Save Question 9 (1 point) When using the net present value method to compare keeping an old building or disposing of it and acquiring a new building, the current cash residual value of the old building should be Question 9 options: a subtraction from the price paid for the new building. viewed as a cash flow. an addition to the price paid for the new building. irrelevant to the decision. Save Question 10 (1 point) A company is considering a project with annual after-tax cash flows of $5,700.00 per year for six years. The company's cost of capital is 14 percent. Present and future value factors for a 14 percent interest rate for six years are as follows: Future value of $1 2.195 Present value of $1 0.456 Future value of a series of equal payments 8.536 Present value of a series of equal payments 3.889 Using the net present value method, what is the maximum amount that the company should invest? Question 10 options: $22,167.30 $48,655.20 $12,511.50 $2,599.20

Explanation / Answer

$22,167.30

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