Gateway Communications is considering a project with an initial fixed assets cost of $1.74 million that will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $232,000. The project will not change sales but will reduce operating costs by $383,500 per year. The tax rate is 21 percent and the required return is 10.7 percent. The project will require $48,000 in net working capital, which will be recouped when the project ends. What is the project’s NPV?

A decrease in which one of the following will increase the accounting break-even quantity? Assume straight-line depreciation is used and ignore taxes.

A stock had returns of 19.10 percent, 22.86 percent, −16.34 percent, 9.50 percent, and 28.57 percent for the past five years. What is the standard deviation of the returns?

Which one of the following items is most likely a derived-demand inventory item?

Which one of the following time periods is associated with low rates of inflation?

Assume you graph a project’s net present value given various sales quantities. Which one of the following statements is correct regarding the resulting function?

A new project has an initial cost of $255,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,300,$18,100, $20,360, $15,200, and $12,000, respectively. What is the average accounting return?

Rossdale Flowers has a new greenhouse project with an initial cost of $337,500 that is expected to generate cash flows of $47,300 for 10 years and a cash flow of $62,700 in Year 11. If the required return is 9 percent, what is the project’s NPV?

A new project has an initial cost of $175,000. The equipment will be depreciated on a straight-line basis to a book value of $67,000 at the end of the four-year life of the project. The projected net income each year is $15,400,$18,150, $23,500, and $15,300, respectively. What is the average accounting return?

You are considering the following two mutually exclusive projects. The crossover rate between these two projects is ___ percent and Project ___ should be accepted if the required return is greaterthan the crossover rate. Year Project A Project B 0 −$ 33,000 −$ 33,000 1 21,000 13,160 2 13,000 11,000 3 13,000 24,500