Alter company's manager has proposed installing an equipment that will cost $36,000, have a 8-year life, and have no salvage value. The company estimates that the machine could produce 4000 units which can be sold evenly throughout the year. The expected income through the life of machinery is $16,000. The machine will generate net cash flows per year of $8,000. Calculate the average rate of return on the investment. a. 44.44% b. 22.22% с. 33.33% d. 11.11% nswer B D. O 0 0 o

Osler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment.What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%

MLF Corporation is evaluating the purchase of a P500,000 die attach machine.  The cash inflows expected from the investment is P145,000 per year for five years with no equipment salvage value.  The cost of capital is 12%.  The net present value factor for five (5) years at 12% is 3.6048 and at 14% is 3.4331.  The internal rate of return for this investment is a. 3.45% b. 2.04% c. 13.8% d. 15.48%

ealthy Food Ltd is considering to invest in one of the two following projects to buy new machinery. Each option will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 7%. The cash flows of the projects are provided below.     Machinery 1 Machinery 2 Cost $396,000 $415,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5   123,000 194,000 205,000 215,000 228,000   196, 000 204,000 212,000 217,000 233,000   Required: Identify which option of machinery should the company accept based on the simple payback period method if the firm maintains a policy that every investment project should recover the initial investment within 2 years.