10. Tam Co. is negotiating for the purchase of equipment that would cost P100,000 with the expectation that P20,000 per year could be saved in after-tax cash costs if the equipment were acquired. The equipment's estimated useful life is 10 years, with no residual value and would be depreciated by the straight-line method. Tam's predetermined minimum desired rate of retum is 12%. Net present value is a. P5,760 c. P12,200 b. P6,440 d. P13,000 e. None of these; answer is 11. Refer to no. 10. Payback period is a. 4.0 years b. 4.4 years c. 4.5 years d. 5.0 years e. None of these; answer is 12. Refer to no. 10. Accrual accounting rate of return based on initial investment is a. 30% b, 20% с. 12% d. 10% e. None of these; answer is 13. Refer to no. 10. In estimating the internal rate of return, the factors in the table of present values of an annuity should be taken from the columns closest to c. 5.00 a. 0.65 b. 1.30 d. 5.65 e. None of these; answer is

10. Tam Co. is negotiating for the purchase of equipment that would cost P100,000 with the expectation that P20,000 per year could be saved in after-tax cash costs if the equipment were acquired. The equipment's estimated useful life is 10 years, with no residual value and would be depreciated by the straight-line method. Tam's predetermined minimum desired rate of retum is 12%. Net present value is a. P5,760 c. P12,200 b. P6,440 d. P13,000 e. None of these; answer is 11. Refer to no. 10. Payback period is a. 4.0 years b. 4.4 years c. 4.5 years d. 5.0 years e. None of these; answer is 12. Refer to no. 10. Accrual accounting rate of return based on initial investment is a. 30% b, 20% с. 12% d. 10% e. None of these; answer is 13. Refer to no. 10. In estimating the internal rate of return, the factors in the table of present values of an annuity should be taken from the columns closest to c. 5.00 a. 0.65 b. 1.30 d. 5.65 e. None of these; answer is

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 11PROB

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