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8. What is the payback period of a project that has an initial investment of $100,000 and generates annual cash inflows of $25,000 for 10 years, with a discount rate of 12%? d) 6 years b) 4 years c) 5 years a) 3 years

8. What is the payback period of a project that has an initial investment of $100,000 and generates annual cash inflows of $25,000 for 10 years, with a discount rate of 12%? d) 6 years b) 4 years c) 5 years a) 3 years

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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6. At a compound interest rate of 10% per year, $10,000 one year ago is now equivalent to- a) $9091 b) $12,100 c) $11,000 d) $8264 7. How many months will it take to pay off a $525 loan, with monthly payments of $15 at the end of each month. if the interest rate is 18%, compounded quarterly? a) 50 b) 45 c) 48 d) None of the mentioned 8. What is the payback period of a project that has an initial investment of $100,000 and generates annual cash inflows of $25,000 for 10 years, with a discount rate of 12%? a) 3 years b) 4 years d) 6 years c) 5 years 9. The U.S. Border Patrol is considering the purchase of a new helicopter for aerial surveillance of the New Mexico-Texas border with Mexico. A similar helicopter was purchased 4 years ago at a cost of $140,000. At an interest rate of 7% per year, what would be the equivalent value today of that $140,000 expenditure? a) $183,512 b) $283,512 c) $483,512 10. Evaluate the compound interest on $10101 for 3 years at the rate of 9% per annum compounded annually. a) 2980 b) 10101 d) $383,512 c) 30000 d) 33333 Question Two: 1. The net present value is the difference between the present value of the cash inflows and the present value of the cash outflows. 2. The present worth of an investment that will grow to $1000 in 10 years at an interest rate of 5% per year, compounded annually is $605. 3. Time Value of money is the most important concept in Engineering Economics. 4. Individuals who come up with a new idea for a good or service, then they make it a reality are called entrepreneur. 5. If you are calculating the simple interest and you are given the time in months. You can find the time in years by dividing the months by 12.
Transcribed Image Text:6. At a compound interest rate of 10% per year, $10,000 one year ago is now equivalent to- a) $9091 b) $12,100 c) $11,000 d) $8264 7. How many months will it take to pay off a $525 loan, with monthly payments of $15 at the end of each month. if the interest rate is 18%, compounded quarterly? a) 50 b) 45 c) 48 d) None of the mentioned 8. What is the payback period of a project that has an initial investment of $100,000 and generates annual cash inflows of $25,000 for 10 years, with a discount rate of 12%? a) 3 years b) 4 years d) 6 years c) 5 years 9. The U.S. Border Patrol is considering the purchase of a new helicopter for aerial surveillance of the New Mexico-Texas border with Mexico. A similar helicopter was purchased 4 years ago at a cost of $140,000. At an interest rate of 7% per year, what would be the equivalent value today of that $140,000 expenditure? a) $183,512 b) $283,512 c) $483,512 10. Evaluate the compound interest on $10101 for 3 years at the rate of 9% per annum compounded annually. a) 2980 b) 10101 d) $383,512 c) 30000 d) 33333 Question Two: 1. The net present value is the difference between the present value of the cash inflows and the present value of the cash outflows. 2. The present worth of an investment that will grow to $1000 in 10 years at an interest rate of 5% per year, compounded annually is $605. 3. Time Value of money is the most important concept in Engineering Economics. 4. Individuals who come up with a new idea for a good or service, then they make it a reality are called entrepreneur. 5. If you are calculating the simple interest and you are given the time in months. You can find the time in years by dividing the months by 12.
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