ABC is considering the purchase of an $80,000 machine on january 1, 2015. It will have...

ABC is considering the purchase of an $80,000 machine on january 1, 2015. It will have a 4 year life with no estimated salvage value.$1 line depreciation will be issued. the net cash income is estimated to be $30,000/year. The hurdle rate is 12% and the income tax rate is 40% Hint: (This project is unacceptable).

1. payback ( rounded to one decimal place) is estimated to be

a. 2.1

b. 3.1

c. 4.1

d. 5.1

2. The accounting rate of return (rounded to one decimal place) is estimated to be

a. 5.5%

b. 6.5%

c. 7.5%

d. 8.5%

3. the net present value (NPV) is estimated to be

a. $(25.334)

b. $1,110

c. $(1,015)

d. $(19,260)

4 The index of probability (rounded to one decimal place) is estimated to be

a. 0.68

b. 1.14

c. 0.99

d. 0.76

5. The Internal rate of return (IRR) ( round to one decimal place) is estimated to be

a. 9.4%

b. 10.4%

c. 11.4%

d. 8.4%

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Expert Solution

Answer with working is given below

ekkarill92 answered 1 year ago

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