Reference no: EM132974310

Questions -

Q1. Monique had just invested Php600,000 in a restaurant. She expects to receive cash income of Php75,000 a year. What is the payback period?

a. 5 years

b. 7.7 years

c. 6.5 years

d. 8 years

Q2. Merlotte invested Php300,000 in a project that pays her an even amount per year for 10 years. The payback period is 6 years. What is Merlotte's yearly cash inflows from the project?

a. Php25,000

b. Php75,000

c. Php50,000

d. Php100,000

Q3. Scottie invested in a project with a payback period of 5.5 years. The project brings Php28.800 per year for a period of 9 years. What was the initial investment?

a. Php108,000

b. Php162,000

c. Php158,400

d. Php240,000

Q4. A firm is considering a project with an annual cash flow of Php160,000. The project 66 have a 5-year life, and the company uses a discount rate of 14%. What is the amount the company could invest in the project and have the project still be acceptable?

a. Php 200,000

b. Php 718,200

c. Php 549,280

d. Php 973,600

Q5. Psycom Company is deciding whether to purchase a new equipment costing Php135,000 and replace an old one purchased 10 years ago. The old equipment had a cost of Php81,000 and has a remaining useful life of 6 years. Based on market studies, the old equipment can be sold for Php42,000. Psycom Company pays tax at a rate of 30% of income before tax. What is the net cash investment at the time of purchase of the new equipment?

a. Php91,020

b. Php114,060

c. Php96,487.50

d. Php118,080

Q6. Grettel has just invested Php180,000 in a restaurant. She expects to receive income of Php32,400 a year, and to have the investment for 10 years. What is the accounting rate of return?

a. 5.56%

b. 14.52%

c. 12.52%

d. 18.00%

Q7. An investment of Php600,000 provides an average net cash flows of Php38,400 with no salvage value. Depreciation is Php4,200 per year. The accounting rate of return using the original investment is

a. 4.00%

b. 5.10%207

c. 5.70%

d. 6.00%

Questions 8 and 9 are based on the following information

Denise invested in a project that requires an initial amount of Php2,347,200 and returned cash inflows of Php450,000 per year for 10 years. A partial table of present value of an annuity of Php1 in arrears is as follows:

Year 2% 4% 6% 8% 10% 12% 14% 16%

10 7.983 8.111 7.360 6.710 6.145 5.650 5.216 4.833

Q8. What is the internal rate of return of this investment?

a. 8%

b. 12%

c. 10%

d. 14%

Q9. Determine the internal rate of return if the returned cash inflow amounted to Php400,000

a. 10%

b. 11.57%

c. 11.2%

d. 11.89%