Question

Dirk's Bakery has sales of $467,000 with costs of $233,000. Interest expense is $26,000 and depreciation is $24,000. The tax rate is 21 percent. What is the net income?

Multiple Choice

• $184,000

• $134,300

• $145,360

• $142,200

• $128,420

Your company will generate $47,000 in annual revenue each year for the next eight years from a new information database. If the appropriate interest rate is 4.4 percent, what is the present value of the savings? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Multiple Choice

• $311,277.14

• $276,352.11

• $288,634.56

• $242,899.04

• $294,768.83

An investment costs $141,000 and has projected cash inflows of $77,100, $83,400, and -$18,100 for Years 1-3, respectively. If the required rate of return is 14.5 percent, should you accept the investment based solely on the internal rate of return rule? Why or why not?

Multiple Choice

• No; The IRR exceeds the required return.

• Yes; The IRR is less than the required rate of return.  

• You should not apply the IRR in this case.

• No; The IRR is less than the required rate of return.

• Yes; The IRR exceeds the required rate of return.

Answer 1