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    Gene Justine Sacdalan
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    1. A table calculates the net present value and profitability index of a project with cash flows of $100,000 per year for 4 years and an initial investment of $350,000. 2. A calculation determines the present value of $20,000 received annually for 5 years is $40,570. 3. A project's payback period is calculated to be 3 years and its accounting rate of return is calculated to be 8.6%.

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    1. A table calculates the net present value and profitability index of a project with cash flows of $100,000 per year for 4 years and an initial investment of $350,000. 2. A calculation determines the present value of $20,000 received annually for 5 years is $40,570. 3. A project's payback period is calculated to be 3 years and its accounting rate of return is calculated to be 8.6%.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    11 views3 pages

    Quiz Problem Solving

    Uploaded by

    Gene Justine Sacdalan
    1. A table calculates the net present value and profitability index of a project with cash flows of $100,000 per year for 4 years and an initial investment of $350,000. 2. A calculation determines the present value of $20,000 received annually for 5 years is $40,570. 3. A project's payback period is calculated to be 3 years and its accounting rate of return is calculated to be 8.6%.

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    © All Rights Reserved
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    of 3

    Gene Justine Sacdalan class no.

    23
    Accounting 14
    Quiz problems

    1.
    Years NCI PVF(12%) total PV of CF
    1 100,000 .8929 89290
    2 100,000 .7972 79720
    3 100,000 .7118 71180
    4 100,000 .6355 63550
    Total 100,000 3.0374 303740
    Less investments (350,000)
    Net present value (46260)
    Profitability index 303740/350000=.7594
    20000x.30=6000

    2
    .75000/30000x365x5yrs= P 4057

    3.
    A. The project's payback is 3 years. By the conclusion of this time period, Ivory will have recovered the
    investment's cost of $52,500 ($20,000 + $17,500 + $15,000 = $52,500).

    B. The accounting rate of return is 8.6%:


    Average income ($22,500 ÷ 5 years = $4,500) ÷ initial investment ($52,500)

    C.
    year
    0 (52500)x 1.0= (52500)
    1 20000x.877= 17540
    2 17500x.769= 13458
    3 15000x.675= 10125
    4 12500x.592=7400
    5 10000x.519= 5190
    total 1213

    4.
    Year
    1.32000x.9090
    2.32000x.8264
    3.32000x.7513
    4.32000x.6830
    Total 3.1697
    101430.4-85000
    16440
    5.
    650000x.30
    195000-650000=
    455000 inflow

    6.
    600000
    (400000)
    (50000)
    50000x.10=5000
    155000

    7.
    18000
    13000
    x.30
    =16500

    8a.
    2000-2500
    =500

    8b.
    2500x.30=750
    5000
    =2650

    9.100000/30000=1.3333

    Year
    1 30000 .9259
    2.30000 .8593
    3.30000 .7938
    4.30000 .7350
    5.30000 .6806
    Total 3.9946 119838
    Less investment 100000
    Net present value (19838)
    Profit index 119838/100000=1.19838

    10.
    Project 5
    150000/200000=75%

    11.
    30000/(8500-1500)=4.29
    12.
    Project X
    1000000/400000=2.5

    Project Y
    3100000/1300000=2.38

    13.
    Year
    1) 120000 480000
    2) 250000 230000
    3) 110000 120000
    4) 80000 40000
    5) 160000

    4.3 years

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