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Cleaners, considering purchasing equipment




Question;29.Cleaners,;considering purchasing equipment costing$60,000 with a 6-year useful life.The;equipment will provide cost savings of14,600 and will be depreciated;straight-line over its useful life with no salvage value.Cleaners requires a;10% rate of return;Presents Value of an;Annuity of 1;Period 8% 9% 10% 11% 12%;13%;6 4.623 4.486 4.355;4.231 4.111 3.784;29-1.What is the;approximate net present value of this investment?;a.27,600;b.3,583;c.1,772;d.5,496;29-2.What is the;approximate profitability index associated with this equipment?;a.1.23;b.1.03;c.1.06;d.0.73;29-3.What is the approximate;internal rate of return for this investment?;a.9%;b.10%;c.11%;d.12%;30.Present Value of an;Annuity of 1;Periods 8% 9% 10%;1.926.917.909;2 1.783 1.759 1.736;3 2.577 2.531 2.487;30-1.A company has a;minimum required rate of return of 10%.It is considering investing in a project;that costs$50,000 and is expected to generate cash inflows of 25,000 at the end;of each year for three years.The profitability index for this project is;a.0.80;b.1.00;c.1.24;d.1.27;30-2.A company has a;minimum required rate of return of 8%.It is considering investing in a preojcet;that costs$91,116 and is expected to generate cash inflows of 36,000 each year;for three years.The approximate internal rate of return on this project is;a.8%;b.9%;c.10%;d.less than the required;8%;33.Dino Company reported;net income of 72,000 for the year.During the year, accounts receivable;increased by7,000, accounts payable decreased by 3,000 and depreciation expense;of 5,000 was recorded.Net cash porvided by operating activities for the year is;a.67,000;b.87,000;c.71,000;d.72,000;34.Fare Company reported;a net loss of 31,000 for the year ended Dec.31,2013.During the year,accounts;receivable decreased 15,000, merchandiseinventory increased 24,000,accounts;payable increased by 30,000, and depreciation expense of 15,000 was;recorded.During 2013,operating activities;a.used net cash of 5,000;b.used net cash of;23,000;c.provided net cash;of5,000;d.provided net cash of;23,000;35.Using the indirect;method,patent amortization expense for the period; deducted from net;income;b.causes cash to;increase;c.cuases cash to;decrease; added to net income;36.In developing the;cash flows from operating activities,most companies in the U.S;a.use the direct method;b.use the indirect;method;c.present both the;indirect and direct methods in their financial reports;d.prepare the operating;activities section on the accrual basis;37.Each of the following;is added to net income in computing net cash provided by operating activities;except;a.amortization expense; increase in accrued;expeneses payable;c.a gain on sale of;equipment;d.a decrease in;inventory;38.Which of the;following would be subtracted from net income using the indirect method?;a.Depreciation expense;b.An increase in;accounts receivable;c.An increase in;accounts payable;d.A decrease in prepaid;expenses;39.Which of the;following would be added to net income using the indirect method?;a.An increase in;accounts receivable;b.An increase in prepaid;expenses;c.Depreciation expense;d.A decrease in accounts;payable;40.which of the;following whould not be an adjustment to net income using the indirect method?;a.Depreciation expense;b.An increase in prepaid;Insurance;c.Amortization expense; increase in land;41.In calculating cash;flows from operating activities using the indirect method, a loss on the sale;of equipment will appear as a(n);a.subtraction from net;income;b.addition to net income;c.addition to cash flow;from investing activities;d.subtraction from cash;flow from investing activities;42.The following;information pertains to Eura Company.;Assets;Cash and short-term;investments ()for Q.42-1->(40,000) Q.42.2->40,000;Accounts;receivable(net)(30,000) 30,000;Inventory (45,000);25,000;Property,plant and equipment;(215,000) 215,000;Total (330,000) 310,000;Liabilities and;Stockholders' Equity;Current liabilities;(60,000) 60,000;Long-term liabilities;(75,000) 75,000;Stockholders;equity-common (195,000) 175,000;Total Liabilities and;Stockholder's Equity (330,000) 310,000;Income Statement;Sales (90,000) 90,000;Cost of goods sold;(45,000) 45,000;Gross profit (45,000);45,000;Operating expenses;(30,000) 25,000;Net income (15,000);20,000;Number of shares of;common stock (5,000) 5,000;Market price of common;stock (22) 22;Dividends per share;(1.00) 1.00;42-1.What is the return;on common stockholders' equity for Eura?;a.4.8%;b.7.7;c.23.1;d.46.2;42-2.What is the;price-earnings ratio for Eura?;a.5times;b.4.0;c.7.3


Paper#50946 | Written in 18-Jul-2015

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