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75. The payback period for the investment is closest to:
76. The simple rate of return on the investment is closest to:
77. The net present value on this investment is closest to:
8-64
78. The internal rate of return on the investment is closest to:
(Ignore income taxes in this problem.) Chow Company has gathered the following data on
a proposed investment project:
79. The payback period for the investment is closest to:
80. The simple rate of return on the investment is closest to:
81. The net present value on this investment is closest to:
8-68
82. The internal rate of return on the investment is closest to:
(Ignore income taxes in this problem.) Bugle's Bagel Bakery is investigating the purchase
of a new bagel making machine. This machine would provide an annual operating cost savings of
$3,650 for each of the next 4 years. In addition, this new machine would allow the production of
one new type of bagel which would result in selling 1,500 dozen more bagels each year. The
company earns a contribution margin of $0.90 on each dozen bagels sold. The purchase price of
this machine is $13,450 and it will have a 4 year useful life. Bugle's discount rate is 14%.
83. The total annual cash inflow from this machine for capital budgeting purposes is:
84. The internal rate of return for this investment is closest to:
8-71
85. The net present value of this investment is closest to:
(Ignore income taxes in this problem.) Oriental Company has gathered the following data
on a proposed investment project:
The company uses straight-line depreciation on all equipment.
86. The payback period for the investment would be:
87. The simple rate of return on the investment would be:
8-74
88. The net present value of this investment would be:
(Ignore income taxes in this problem.) Houis Inc. is considering the acquisition of a new
machine that costs $300,000 and has a useful life of 5 years with no salvage value. The
incremental net operating income and incremental net cash flows that would be produced by the
machine are:
89. If the discount rate is 11%, the net present value of the investment is closest to:
8-76
90. The payback period of this investment is closest to:
(Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment
that costs $480,000 and has a useful life of 6 years with no salvage value. The incremental net
cash flows that would be generated by the equipment are:
91. If the discount rate is 10%, the net present value of the investment is closest to:
8-78
92. The payback period of this investment is closest to:
(Ignore income taxes in this problem.) The management of Melchiori Corporation is
considering the purchase of a machine that would cost $310,000, would last for 6 years, and
would have no salvage value. The machine would reduce labor and other costs by $116,000 per
year. The company requires a minimum pretax return of 16% on all investment projects.
93. The present value of the annual cost savings of $116,000 is closest to:
8-80
94. The net present value of the proposed project is closest to:
(Ignore income taxes in this problem.) Lichty Car Wash has some equipment that needs to
be rebuilt or replaced. The following information has been gathered concerning this decision:
Lichty uses the total-cost approach and a discount rate of 10% in making capital budgeting
decisions. Regardless of which option is chosen, rebuild or replace, at the end of five years Mr.
Lichty plans to close the car wash and retire.
