Zeus Products needs to purchase a new machine. The machine costs $27,000 and will reduce operating...

Zeus Products needs to purchase a new machine. The machine costs $27,000 and will reduce operating costs by $3,500 per year. The company is able to sell their old machine for $4,500. What is the payback period in years? Enter the value with 2 decimals.

Answer:___________

A company is deciding if they want to invest $90,000 in a machine that will result in a cost reduction of $20,000 in each of 8 years. The company can earn a rate of return of 12% by investing its money elsewhere. At the end of the 8 years, the machine will have no salvage value. The present value for an annuity for 8 years at 12%. Is 4.968 and the present value for a dollar at 8 years and 12% is 0.404. What is the net present value of the investment?

Answer:___________

When a company makes a capital budgeting decision, all of the following would be examples of questions they would ask except:
1. Should we purchase a new facility to increase production?
2. Should we purchase a new machine to reduce costs?
3. Should we purchase or lease a new machine?
4. Should we purchase more raw material to increase production?

Which of the following statements is incorrect related to net present value?
1. If a net present is positive, then the project should be accepted
2. If a net present value is negative, then the project should be rejected
3. If a net present value is positive, the return is greater than the required rate of return
4. If a net present value is negative, the required rate of return is less than the return

If a $200,000 investment has a project profitability index of 0.30, what is the net present value of the project?
1. $30,000
2. $170,000
3. $140,000
4. $60,000

Zora Manufacturing needs to purchase a new machine. The machine costs $12,000 and will reduce operating costs by $4,000 per year. The company is able to sell their old machine for $1,500. What is the payback period, rounded to the nearest 2 decimals?
1. 3 years
2. 2.63 years
3. 5.33 years
4. 8 years

A company is deciding if they want to invest $40,000 in a machine that will result in a cost reduction of $7,000 in each of 10 years. The company can earn a rate of return of 10% by investing its money elsewhere. At the end of the 10 years, the machine will have no salvage value. The present value of an annuity for 10 years at 10% is 6.145 and the present value of a dollar at 10 years at 10% is 0.386. What is the net present value of the investment?
1. $30,000
2. -$12,980
3. $3,015
4. None of the choices listed

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ekkarill92 answered 1 year ago

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