Multiple Choice Question 140 Larkspur Company is considering buying equipment for $360000 with a useful life of 5 years and an estimated salvage...

Multiple Choice Question 140

Larkspur Company is considering buying equipment for $360000 with a useful life of 5 years and an estimated salvage value of $22000. If annual expected income is $28000, the denominator in computing the annual rate of return is

$180000.

$360000.

$191000.

$382000.

Splish Brothers Company had an investment which cost $400000 and had a salvage value at the end of its useful life of zero. If Mussina's expected annual net income is $15000, the annual rate of return is:

3.75%.

7.50%.

10.13%.

9.38%.

If a project costing $70000 has a profitability index of 1 and the discount rate was 12%, then the present value of the net cash flows was

greater than $70000.

undeterminable.

$70000.

less than $70000.