### 73 the expected amount of time to recover the initial amount of an investment is cal 4295856

73.The expected amount of time to recover the initial amount of an investment is called the:

A.Amortization period.

B.Payback period.

C.Interest period.

D.Budgeting period.

E.Discounted cash flow period.

74.A company is considering purchasing a machine for $21,000. The machine will generate an after-tax net income of $2,000 per year. Annual depreciation expense would be $1,500. What is the payback period for the new machine?

A.4 years.

B.6 years.

C.10.5 years.

D.14 years.

E.42 years.

75.A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual cash inflows from this investment are $36,000 (year 1), $30,000 (year 2), $18,000 (year 3), $12,000 (year 4) and $6,000 (year 5). The payback period is:

A.4.50 years.

B.4.25 years.

C.3.50 years.

D.3.00 years.

E.2.50 years.

0$(90,000)$(90,000)

136,000(54,000)

230,000(24,000)

318,000(6,000)

412,0006,000

56,00012,000

76.A disadvantage of using the payback period to compare investment alternatives is that:

A.It ignores cash flows beyond the payback period.

B.It includes the time value of money.

C.It cannot be used when cash flows are not uniform.

D.It cannot be used if a company records depreciation.

E.It cannot be used to compare investments with different initial investments.

77.A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $12,000 per year including depreciation of $3,000 per year. The company's tax rate is 40%. What is the payback period for the new machine?

A.20.0 years.

B.6.0 years.

C.7.5 years.

D.12.0 years.

E.8.9 years.

78.A company is planning to purchase a machine that will cost $24,000, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine?

A.24 years.

B.12 years.

C.6 years.

D.4 years.

E.1 year.

79.A company is planning to purchase a machine that will cost $24,000, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine?

A.33.3%.

B.16.7%.

C.50.0%.

D.8.3%.

E.4%.

80.After-tax net income divided by the average amount invested in a project, is the:

A.Net present value rate.

B.Payback rate.

C.Accounting rate of return.

D.Earnings from investment.

E.Profit rate.

81.A company buys a machine for $60,000 that has an expected life of 9 years and no salvage value. The company anticipates a yearly net income of $2,850 after taxes of 30%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?

A.2.85%.

B.4.75%.

C.6.65%.

D.9.50%.

E.42.75%.

82.A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value. The company anticipates a yearly after tax net income of $1,805. What is the accounting rate of return?

A.2.85%.

B.4.75%.

C.6.65%.

D.9.50%.

E.42.75%.