21.doc-Accounting, 9e, Global Edition (H...
21.doc-Accounting, 9e, Global Edition (Horngren) Chapter
Showing 18-21 out of 86
21.doc-Accounting, 9e, Global Editi...
21.doc-Accounting, 9e, Global Edition (Horngren) Chapter
##### Page 18
31) A company is evaluating 3 possible investments.
Each uses straight-line depreciation.
See data below:
Project A
Project B
Project C
Investment
\$400,000
\$20,000
\$100,000
Salvage value
\$0
\$2,000
\$5,000
Net cash flows:
Year 1
\$100,000
\$10,000
\$40,000
Year 2
\$100,000
\$8,000
\$25,000
Year 3
\$100,000
\$5,000
\$30,000
Year 4
\$100,000
\$3,000
\$10,000
Year 5
\$100,000
\$0
\$0
What is the rate of return for Project A?
A) 50%
B) 4%
C) 16%
D) 10%
D
Explanation:
D) Calculations:
(\$500,000 - \$400,000)/5 = \$20,000
\$400,000/2 = \$200,000
\$20,000/\$200,000 = 10%
Diff: 3
LO:
21-2
EOC Ref:
E21-17
AACSB:
Analytic Skills
Critical Thinking
AICPA Functional:
Measurement
18

##### Page 19
32) A company is evaluating 3 possible investments.
Each uses straight-line depreciation.
See data below:
Project A
Project B
Project C
Investment
\$400,000
\$20,000
\$100,000
Salvage value
\$0
\$2,000
\$5,000
Net cash flows:
Year 1
\$100,000
\$10,000
\$40,000
Year 2
\$100,000
\$8,000
\$25,000
Year 3
\$100,000
\$5,000
\$30,000
Year 4
\$100,000
\$3,000
\$10,000
Year 5
\$100,000
\$0
\$0
What is the rate of return for Project B?
A) 50%
B) 4%
C) 18%
D) 10%
C
Explanation:
C) Calculations:
(\$26,000 - \$18,000)/4 = \$2,000
(\$20,000 + \$2,000)/2 = \$11,000
\$2,000/\$11,000 = 18%
Diff: 3
LO:
21-2
EOC Ref:
E21-17
AACSB:
Analytic Skills
Critical Thinking
AICPA Functional:
Measurement
19

##### Page 20
33) A company is evaluating 3 possible investments.
Each uses straight-line depreciation.
See data below:
Project A
Project B
Project C
Investment
\$400,000
\$20,000
\$100,000
Salvage value
\$0
\$2,000
\$5,000
Net cash flows:
Year 1
\$100,000
\$10,000
\$40,000
Year 2
\$100,000
\$8,000
\$25,000
Year 3
\$100,000
\$5,000
\$30,000
Year 4
\$100,000
\$3,000
\$10,000
Year 5
\$100,000
\$0
\$0
What is the rate of return for Project C?
A) 5%
B) 4%
C) 18%
D) 10%
A
Explanation:
A) Calculations:
(\$105,000 - \$95,000)/4 = \$2,500
(\$100,000 + \$5,000)/2 = \$52,500
\$2,500/\$52,500 =5%
Diff: 3
LO:
21-2
EOC Ref:
E21-17
AACSB:
Analytic Skills
Critical Thinking
AICPA Functional:
Measurement
20

##### Page 21
Learning Objective 21-3
1) If Teddy Godfried invests \$400,000 today at a rate of 9% compounding yearly, his investment will grow to
\$1,000,000 in 10 years.
Future
Value of
\$1
4%
5%
6%
7%
8%
9%
1
1.040
1.050
1.060
1.070
1.080
1.090
2
1.082
1.103
1.124
1.145
1.166
1.188
3
1.125
1.158
1.191
1.225
1.260
1.295
4
1.170
1.216
1.262
1.311
1.360
1.412
5
1.217
1.276
1.338
1.403
1.469
1.539
6
1.265
1.340
1.419
1.501
1.587
1.677
7
1.316
1.407
1.504
1.606
1.714
1.828
8
1.369
1.477
1.594
1.718
1.851
1.993
9
1.423
1.551
1.689
1.838
1.999
2.172
10
1.480
1.629
1.791
1.967
2.159
2.367
FALSE
Explanation:
Calculations:
2.367 × \$400,000 = \$946,800
Diff: 2
LO:
21-3
EOC Ref:
S21-8
AACSB:
Analytic Skills
Critical Thinking
AICPA Functional:
Measurement
21

Browse thousands of Study Materials & Solutions from your Favorite Schools
San Jose State University
San_Jose_State_University
School:
Managerial_Accounting
Course:
Great resource for chem class. Had all the past labs and assignments
Leland P.
Santa Clara University
Introducing Study Plan
Using AI Tools to Help you understand and remember your course concepts better and faster than any other resource.
Find the best videos to learn every concept in that course from Youtube and Tiktok without searching.
Save All Relavent Videos & Materials and access anytime and anywhere
Prepare Smart and Guarantee better grades