Shields Company has gathered the following data on a proposed

investment project: (Ignore income taxes in this problem.)

Investmentrequiredinequipment
Annualcashinflows

$680,000
$66,000

Salvagevalue
Lifeoftheinvestment

$0
20years

Requiredrateofreturn

7%

The company uses straight-line depreciation. Assume cash flows occur

uniformly throughout a year except for the initial investment.
Thepaybackperiodfortheinvestmentisclosestto:
0.1years
1.0years
8.3years
10.3years

(Ignore income taxes in this problem.) The management of Helberg

Corporation is considering a project that would require an investment
of $291,000 and would last for 6 years. The annual net operating
income from the project would be $139,000, which includes
depreciation of $18,000. The scrap value of the project's assets at the
end of the project would be $19,900. The cash inflows occur evenly
throughout the year. The payback period of the project is closest to:
1.9years
2.1years
1.6years
1.8years

The management of Londo Corporation is investigating buying a small

used aircraft to use in making airborne inspections of its above-ground
pipelines. The aircraft would have a useful life of 6 years. The company
uses a discount rate of 20% in its capital budgeting. The net present
value of the investment, excluding the intangible benefits, is
$474,840. (Ignore income taxes in this problem)
How large would the annual intangible benefit have to be to make the
investment in the aircraft financially attractive? (Round discount

factor(s) to 3 decimal places and final answer to the nearest

dollar amount.)
$474,840
$142,766
$79,140
$94,968

The management of Urbine Corporation is considering the purchase of

a machine that would cost $410,000 would last for 7 years, and would
have no salvage value. The machine would reduce labor and other
costs by $67,000 per year. The company requires a minimum pretax
return of 7% on all investment projects. (Ignore income taxes in this
problem.)
The net present value of the proposed project is closest to: (Round
discount factor(s) to 3 decimal places, intermediate and final
answers to the nearest dollar amount.)
$48,937
$8,937
$73,857
$24,017

(Ignore income taxes in this problem.) The management of Stanforth

Corporation is investigating automating a process. Old equipment, with
a current salvage value of $12,000, would be replaced by a new
machine. The new machine would be purchased for $402,000 and
would have a 6 year useful life and no salvage value. By automating
the process, the company would save $139,000 per year in cash
operating costs. The simple rate of return on the investment is closest
to:
18.5%
17.9%
34.6%
16.7%

(Ignoreincometaxesinthisproblem.)DubeCorporationisconsideringthefollowingthreeinvestmentprojects:

Investmentrequired
Presentvalueofcashinflows

ProjectD
$12,400

ProjectE
$55,000

ProjectF
$100,000

$14,830

$78,950

$117,160

The profitability index of investment project E is closest to:

0.44

1.44

0.56

0.30

(Ignore income taxes in this problem.) Buy-Rite Pharmacy has

purchased a small auto for delivering prescriptions. The auto was
purchased for $31,000 and will have a 6-year useful life and a $4,300
salvage value. Delivering prescriptions (which the pharmacy has never
done before) should increase gross revenues by at least $32,300 per
year. The cost of these prescriptions to the pharmacy will be about
$25,600 per year. The pharmacy depreciates all assets using the
straight-line method. The payback period for the auto is closest to:

4.6years

4years

5.3years

 3.8years

(Ignoreincometaxesinthisproblem.)NeighborsCorporationisconsideringaprojectthatwouldrequirean
investmentof$324,000andwouldlastfor8years.Theincrementalannualrevenuesandexpensesgeneratedbythe
projectduringthose8yearswouldbeasfollows:

Sales

$200,000

Variableexpenses
Contributionmargin

27,000
173,000

Fixedexpenses:
Salaries

34,000

Rents

47,000
42,000

Depreciation
Totalfixedexpenses
Netoperatingincome

123,000
$50,000

The scrap value of the project's assets at the end of the project would
be $24,000. The cash inflows occur evenly throughout the year. The
payback period of the project is closest to

3.5years

6.5years

5.0years

3.3years

Blaine Corporation is considering replacing a technologically obsolete

machine with a new state-of-the-art numerically controlled machine.

The new machine would cost $200,000 and would have a sixteen-year
useful life. Unfortunately, the new machine would have no salvage
value. The new machine would cost $30,000 per year to operate and
maintain, but would save $62,000 per year in labor and other costs.
The old machine can be sold now for scrap for $20,000. The simple
rate of return on the new machine is closest to: (Ignore income taxes in
this problem.)
9.75%
31.00%
21.67%
10.83%

(Ignoreincometaxesinthisproblem.)TheZingerCorporationisconsideringaninvestmentthathasthefollowing
data:

Investment
Cashinflow

Year1
$12,000

Year2
$3,800

$2,800

$2,800

Year3

Year4

Year5

$8,700

$4,800

$4,800

Cash inflows occur evenly throughout the year. The payback period for
this investment is: (Round your answer to 1 decimal place)

3years

3.3years

4years

4.3years

(Ignoreincometaxesinthisproblem.)Assumeyoucaninvestmoneyata14%rateofreturn.Howmuch
moneymustbeinvestednowinordertobeabletowithdraw$5,000fromthisinvestmentattheendofeach
yearfor8years,thefirstwithdrawaloccurringoneyearfromnow?

 $24,840
$23,195
$21,440
$1,755

Thepresentvalueofacashflowwillneverbelessthanthefuturedollaramountofthecashflow.
True
False

(Ignoreincometaxesinthisproblem.)Jamesjustreceivedan$8,000inheritancecheckfromtheestateof
hisdeceasedrichuncle.Jameswantstosetasideenoughmoneytopayforatripinfiveyears.Ifthetripis
expectedtocost$5,000,howmuchofthe$8,000mustJamesdepositnowiftherateofreturnis12%per
yearinordertohavethe$5,000infiveyears?
$2,535
$2,835
$2,000
$5,000

(Ignoreincometaxesinthisproblem.)Howmuchwouldyouhavetoinvesttodayinthebankataninterest
rateof5%tohaveanannuityof$1,400peryearfor5years,withnothingleftinthebankattheendofthe5
years?Selecttheamountbelowthatisclosesttoyouranswer.
$6,667
$6,061
$7,000
$1,098

(Ignoreincometaxesinthisproblem.)Youhavedeposited$16,700inaspecialaccountthathasa
guaranteedrateofreturnof11%peryear.Ifyouarewillingtocompletelyexhausttheaccount,whatisthe
maximumamountthatyoucouldwithdrawattheendofeachofthenext6years?Selecttheamountbelow
thatisclosesttoyouranswer.
$3,465
$3,089
$2,783

 $3,947

LucasCompanyrecordedthefollowingeventslastyear:

RepurchasebyLucasofitsowncommonstock
Saleoflongterminvestment

$44,000
$63,000

Interestpaidtolenders
Dividendspaidtothecompany'sshareholders

$17,000
$73,000

CollectionbyLucasofaloanmadetoanothercompany
Paymentoftaxestogovernmentalbodies

$49,000
$27,000

Onthestatementofcashflows,someoftheseeventsareclassifiedasoperatingactivities,someare
classifiedasinvestingactivities,andsomeareclassifiedasfinancingactivities.
Basedsolelyontheinformationabove,thenetcashprovidedby(usedin)investingactivitiesonthe
statementofcashflowswouldbe:
$39,000
$(7,000)
$(22,000)
$112,000

AnsbroCorporation'smostrecentbalancesheetappearsbelow:

AnsbroCorporation
ComparativeBalanceSheet
Ending
Balance

Assets:
Cashandcashequivalents
Accountsreceivable
Inventory

Beginning
Balance

$99

$44

56
76

59
111

Property,plantandequipment

646

555

Less:accumulateddepreciation

254

229

$623

$540

Accountspayable
Accruedliabilities

$64
40

$73
39

Incometaxespayable
Bondspayable

27
252

51
223

98

92

142

62

$623

$540

Totalassets
Liabilitiesandstockholders'equity:

Commonstock
Retainedearnings

Totalliabilitiesandstockholders'equity

Netincomefortheyearwas$106.Cashdividendswere$26.Thecompanydidnotdisposeofanyproperty,
plant,andequipment.Itdidnotissueanybondspayableorrepurchaseanyofitsowncommonstock.The
followingquestionpertaintothecompany'sstatementofcashflows
Thenetcashprovidedby(usedin)operatingactivitiesfortheyearwas:

$137

$97

$169

$31

FinancialstatementsofAnsbroCorporationfollow:


AnsbroCorporation
ComparativeBalanceSheet
Ending
Balance

Assets:

Beginning
Balance

Cashandcashequivalents

$33

$30

84
43

81
40

Property,plantandequipment

663

570

Less:accumulateddepreciation

348

308

$475

$413

$63
140

$70
200

95

81

177

62

$475

$413

Accountsreceivable
Inventory

Totalassets
Liabilitiesandstockholders'equity:
Accountspayable
Bondspayable
Commonstock
Retainedearnings

Totalliabilitiesandstockholders'equity

IncomeStatement
Sales

$750

Costofgoodssold

403

Grossmargin

347

Sellingandadministrativeexpenses

134

Netoperatingincome

213

Incometaxes

78

$135

Netincome

Cash dividends were $20. The company did not dispose of any
property, plant, and equipment. It did not issue any bonds payable or
repurchase any of its own common stock. The following questions
pertain to the company's statement of cash flows
the net cash provided by (used in) investing activities for the year was:
$(93)
$(20)
$(60)
$14

Boole Corporation's net cash provided by operating activities was

$140; its capital expenditures were $71; and its cash dividends were
$30. The company's free cash flow was:
$69
$241
$110
$39

MeganCorporation'snetincomelastyearwas$100,000.Changesinthecompany'sbalancesheetaccountsfortheyearappearbelo

AssetandContraAssetAccounts:
Cash
Accountsreceivable
Inventory
Prepaidexpenses
Longterminvestments

Increases
(Decreases)

$(4,600)
$(16,000)
$4,000
$(8,400)
$82,000

Property,plantandequipment
Accumulateddepreciation

$59,000
$62,000

LiabilityandEquityAccounts:

Accountspayable
Accruedliabilities
Incometaxespayable
Bondspayable
Commonstock
Retainedearnings

$0
$16,600
$(12,000)
$(33,000)
$22,000
$60,400

The company paid a cash dividend of $39,600 and it did not dispose of
any long-term investments or property, plant, and equipment. The
company did not issue any bonds payable or repurchase any of its own
common stock. The following questions pertain to the company's
statement of cash flows.
Thefreecashflowfortheyearwas:

$128,000

$88,400

$147,400

$281,000

Salsedo Corporation's balance sheet and income statement appear

below:

Cash dividends were $9. The company sold equipment for $15 that
was originally purchased for $10 and that had accumulated
depreciation of $5. It did not issue any bonds payable or repurchase
any of its own common stock.
The net cash provided by (used in) financing activities for the year was:
$(9)

 $(15)
$(21)
$3

The data given below are from the accounting records of the Kuhn
Corporation:

Based on this information, the net cash provided by operating activities

using the indirect method would be:
$55,000
$58,000
$50,000
$60,000

Adah Corporation prepares its statement of cash flows using the

indirect method. Which of the following would be subtracted from net
income in the operating activities section of the statement?

OptionA
OptionB
OptionC
OptionD

Financial statements of Rukavina Corporation follow:

Cash dividends were $8. The company did not dispose of any property,
plant, and equipment. It did not issue any bonds payable or repurchase
any of its own common stock. The following question pertain to the
company's statement of cash flows.
The net cash provided by (used in) investing activities for the year was:
$26
$15
$(26)
$(15)

Shoshoni Corporation prepares its statement of cash flows using the

indirect method. Which of the following would be added to net income
in the operating activities section of the statement?

OptionA

 OptionB
OptionC
OptionD

investingactivitiesonthestatementofcashflowsgeneratecashinflowsandoutflowsrelatedtoborrowing
fromandrepayingprincipaltocreditorsandcompletingtransactionswiththecompany'sownerssuchas
sellingorrepurchasingsharesofcommonstocksandpayingdividends.
True
False

Thedirectmethodofpreparingthestatementofcashflowswillshowthesameincreaseordecreasein
cashastheindirectmethod.
True
False

Inastatementofcashflows,issuingbondspayableaffectsthe:
operatingactivitiessection.
financingactivitiessection.
investingactivitiessection.
freecashflowactivitiessection.

RandalCorporationrecordedthefollowingactivityfortheyearjustended:

Thenetcashprovidedbyfinancingactivitiesfortheyearwas:
$100,000

 $550,000
$180,000
$680,000

Krech Corporation's comparative balance sheet appears below:

The company's net income (loss) for the year was ($3,000) and its cash
dividends were $3,000. It did not sell or retire any property, plant, and
equipment during the year. The company uses the indirect method to
determine the net cash provided by operating activities.
The company's net cash provided by operating activities is:
$29,000
$19,000
$27,000
$21,000