Capital budgeting is the process of analyzing alternative

91. Eagle Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Compute the payback period for this investment. (Round to two decimal places.)

A. 2.85 years.

B. 2.57 years.

C. 3.00 years.

D. 2.50 years.

E. 3.62 years.

94. A machine costs $180,000 and is expected to yield an after-tax net income of $10,800 each year. Management estimates the machine will have a ten-year life, a $20,000 salvage value, and straight-line depreciation is used. Compute the accounting rate of return for the investment.

A. 12.0%.

B. 26.8%.

C. 11.8%.

D. 10.8%.

E. 28.8%.

95. Edgar Company is considering the purchase of new equipment costing $80,000. The projected annual after-tax net income from the equipment is $10,200, after deducting $20,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Edgar requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.

A. $(15,731).

B. $(4,896).

C. $15,731.

D. $4,896.

E. $32,334.

96. Edgar Company is considering the purchase of new equipment costing $80,000. The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Edgar requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.

A. $(15,731).

B. $(4,896).

C. $15,731.

D. $4,896.

E. $23,775.

97. Eagle Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Compute the break-even time (BET) period for this investment. (Round to two decimal places.)

A. 2.85 years.

B. 2.57 years.

C. 3.17 years.

D. 2.98 years.

E. 3.62 years.