1. The capital budgeting manager for XYZ Corporation, a very profitable high technology company, completed her analysis of Project A assuming 5 year depreciation. He accountant reviews the analysis and change the depreciation method to 3 year depreciation. This change will, ________ (Points :1), Increase the present value of the net cash flow , Decrease the present value of the net cash flow , Have no effect on the net cash flow because depreciation is a non cash expense , Only change the net cash flows if the useful life of the depreciable asset is greater than five years. ,,,2. A capital budgeting project has a net present value of $10,000 and a modified internal rate of return of 13%. The project’s required rate of return is 11 %. The internal rate of return is ______ (Points :1), Greater than 13 % , Less than 11 % , Between 11% and 13% , Less than $10,000 ,,,3. Zellar’s, Inc. Is considering two mutually exclusive projects, A and B. Project A costs ,$ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.’s required rate of return for these projects is 10%. The profitability index for Project A is ________ (Points :1), 1.47 , 1.22 , 1.13 , 1.08 ,,,4. Zellar’s, Inc. Is considering two mutually exclusive projects, A and B. Project A costs,$ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.’s required rate of return for these projects is 10%. The internal rate of return for Project A is ________ (Points :1), 11.43% , 13.87% , 15.81% , 17.45% ,,,5. Zellar’s, Inc. Is considering two mutually exclusive projects, A and B. Project A costs $ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.’s required rate of return for these projects is 10%. The internal rate of return for Project B is ________ (Points :1), 26.74% , 20.79% , 18.64% , 16.77% ,,,6. Your company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost $30,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight line method over a useful life of 10 years. The old van could be sold today for $5,000. The new van has an invoice price of $75,000, and it will cost $5,000 to modify the van to carry the company’s products. Cost savings from use of the new van are expected to be $ 22,000 per year for 5 years. At which time the van will be sold for its estimated salvage value of $15,000. The new van will be depreciated using the simplified straight line method over its 5 year useful life. The company’s statutory rate is 35%. Working capital is expected to increase by $3,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the tax effect of selling the old machine? (Points :1), A savings of $1,750 , A savings of $3,500 , Additional taxes paid of $1,750 , A tax savings of $1,200 ,,,7. J.B. Enterprises purchased a new molding machine for $75,000. The company paid $6,000 for shipping and another $ 4,000 to get the machine integrated with the company’s existing assets. J.B. Must maintain a supply of special lubricating oil just in case the machine breaks down. The company purchased a supply of oil for $2,000. The machine is to be depreciated on a straight line basis over its expected useful life of 10 years. What will depreciation expense be during the first year? (Points :1), $7,500 , $8,100 , $8,500 , $8,700 ,,,8. Nickel Industries is considering the purchase of a new machine that will cost $178,000, plus an additional $12,000 to ship and install. The new machine will have a 5 year useful life and will be depreciated using the straight line method. The machine is expected to generate new sales of $85,000 per year and is expected to increase operating costs by $ 10,000 annually. Nickel’s income tax rate is 40%. What is the projected incremental cash flow of the machine or year 1? (Points :1), $54,800 , $60,200 , $66,350 , $68,200 ,,,9. Jiffy Wax Corp. Can sell common stock for $15 per share and its investors require a 14 % return. However, the administrative or flotation costs associated with selling the stock amount to $2.40 per share. What is the cost of capital for Jiffy Wax if the corporation raises money by selling preferred stock? (Points :1), 30.00% , 21.50% , 16.67% , 14.00% ,,,10. The risk free rate of return is 3% and the market risk premium is 12%. Penn Trucking has a beta of 1.8 an a standard deviation of returns of 24 %. Penn Trucking’s marginal tax rate is 40%. Analyst expect Penn Trucking’s dividends to grow by 5% per year for the foreseeable future. Using the capital asset pricing model, what is Penn Trucking’s cost of retained earnings? (Points :1), 17.4% , 19.2% , 24.6% , 27.0% ,,

Order Your Custom Essay

Order Your Custom Essay

Regent Papers is a library of common essays on high school, college, undergraduate and postgraduate topics. We have collected top papers from various institution, students and professors. The papers are based on common essay topics in all subjects.

M | T | W | T | F | S | S |
---|---|---|---|---|---|---|

« Oct | ||||||

1 | 2 | |||||

3 | 4 | 5 | 6 | 7 | 8 | 9 |

10 | 11 | 12 | 13 | 14 | 15 | 16 |

17 | 18 | 19 | 20 | 21 | 22 | 23 |

24 | 25 | 26 | 27 | 28 | 29 | 30 |

31 |

© 2015 www.regentessays.com. All Rights Reserved