1. C 11.D 22.B 31.B 41.

C
2. D 12.B 23.C 32.C 42.B
3. D 13.A 24.D 33.B 43.B
4. C 14.B 25.D 34.D 44.C
5. C 15.B 26.C 35.B 45.C
6. C 16.B 27.C 36.B
7. A 17.C 28.B 37.D
8. D 18.A 29.D 38.D
9. D 19.D 30.B 39.B
10. D 20.D 40.B
21.A

26. C
PV of annual cost 14,427
Net Investment (13,427)
Net PV 1,000

27. C
40,000 = 3.3 years
12,000

28. B
DEP. 40,000 = 5,000
8
INCOME = 12,000 -5000= 7,000
ARR = 7,000/40,000 = 17.5%

29.
70,000 70,000 70,000 70,000 70,000 70,000
1+ 2
+ 3+ 4
+ 5
+ 6 = 47,790
(1+.12) (1+.12) (1+.12) (1+.12) (1+ .12) (1+ .12)

30. B
Year Cash Inflows
1 7,000
2 7000
3 7000
4 5,500
5 3,500
30,000
31. B
 66,000/12%= 550,000
32. C
Year Present value
of P I at 10%
1 20,000 x .909 = 18,180
2 20,000 x .826 = 16,520
3 20,000 x .751 = 15,020
4 20,000 x .653 = 13,060
5 20,000 x .621 = 12,450
75,820

33.B
P40,000 x .909= 36,360
P50,000 x .826=41,300
77,660
34.D
NEW MACHINE 90,000
BOOK VALUE (50,000)
40,000
35. B
46,600 = 10,000
46,600 = 4.66
10,000
4.83 – 4.66 = 17%
36. B
2,000 X 3 YRS = 6,000
3,000 X 3 YRS = 9,000
15,000

37. D
16,000 X .12 = 1,920
DEP. + 1,600
3,520
38. D
80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
1+
+ + + + + +
(1+.14) (1+.14) (1+ .14) (1+.14) (1+.14) (1+.14) (1+.14 ) (1+.14)8
2 3 4 5 6 7

= 371,120/ 4.639 = 80,000

39. B
 40,000 = 10,000 X 3.791
40,000 = 37 910 10%
 40,000 = 10,000 X 3.993
40,000 = 39,930 9%
 Therefore, less than 10% but more than 0%
40. B
FIRST Yr. = 90,000
Payback period
Year
1 15,000 (45K-15K) 30,000
2 12,000 18,000
3 9,000 9,000
4 6,000 3,000
5 3,000 0
41. C
3,000/ .20 = 15,000
42. B
2,000
X 4.355
8,710
43. B
90,000 x 4.564 = 410,760
(400,000)
10,760
44. C
2,000 x 13.181 = 26,362
45. C
145,000 145,000 145,000 145,000 145,000
1+
+ 3+
+ =500,000
(1+13.8 %) (1+13.8 %) (1+ 13.8 %) (1+13.8 %) (1+13.8 %)5
2 4

13.8%