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The time value of money concept works on the prin...




The time value of money concept works on the principle that a dollar today is worth more than a dollar tomorrow. True False 17. The net present value capital budgeting method considers all estimated cash flows for the project's expected life. True False 28. The payback method, unlike the net present value method, does not ignore cash flows after the point of cost recovery. True False 37. The process of analyzing alternative investments and deciding which assets to acquire or sell is known as: A. Planning and control. B. Capital budgeting. C. Variance analysis. D. Master budgeting. E. Managerial accounting. 39. The time value of money concept: A. Means that a dollar today is worth less than a dollar tomorrow. B. Means that a dollar tomorrow is worth more than a dollar today. C. Means that a dollar today is worth more than a dollar tomorrow. D. Means that "Time is Money". E. Does not involve the concept of compound interest. 40. A minimum acceptable rate of return for an investment decision is called the: A. Internal rate of return. B. Average rate of return. C. Hurdle rate of return. D. Maximum rate of return. E. Payback rate of return. ? 60. A company is considering purchasing a machine for $21,000. The machine will generate an after-tax net income of $2,000 per year. Annual depreciation expense would be $1,500. What is the payback period for the new machine? A. 4 years. B. 6 years. C. 10.5 years. D. 14 years. E. 42 years. 82. Which of the following cash flows is not considered when using the net present value method? A. Future cash inflows. B. Future cash outflows. C. Past cash outflows. D. Non-uniform cash inflows. E. Cash inflow from the sale of the asset. 83. An estimate of an asset's value to the company, calculated by discounting the future cash flows from the investment at an appropriate rate and then subtracting the initial cost of the investment, is known as: A. Annual net cash flows. B. Rate of return on investment. C. Net present value. D. Payback period. E. Unamortized carrying value. ? 88. The following present value factors are provided for use in this problem: Present Value Present Value of an Periods of 1 at 8% Annuity of 1 at 8% 1 0.9259 0.9259 2 0.8573 1.7833 3 0.7938 2.5771 4 0.7350 3.3121 Norman Co. wants to purchase a machine for $40,000, but needs to earn an 8% return. The expected year-end net cash flows are $12,000 in each of the first three years, and $16,000 in the fourth year. What is the machine's net present value (round to the nearest whole dollar)? A. $(9,075) B. $2,685 C. $42,685 D. $(28,240) E. $52,000,Thank you very much!!


Paper#3051 | Written in 18-Jul-2015

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