61) Speedy Print Shop bought a new high-speed photo copier to offer customers the opportunity to make high-quality copies out of their digital pictures. Its useful life is 6 years. The copier cost $7,740 and will generate annual cash inflows of $2,150. The residual value of the copier is $1,320. The payback period in years is closest to
62) Buxton Corporation is evaluating a capital investment project which would require an initial investment of $240,000 to purchase new machinery. The annual revenues and expenses generated specifically by this project each year during the project's nine year life would be:
Total fixed expenses$80,000
The residual value of the machinery at the end of the nine years would be $15,000. The payback period of this potential project in years would be closest to
63) Smith & Cramer, Computer Repair, is considering an investment in computer and network equipment costing $254,000. This equipment would allow them to offer new programming services to clients. The equipment will be depreciated on the straight-line basis over an eight-year period with an estimated residual value of $60,000. Using the accounting rate of return model, what is the minimum average annual operating income that must be generated from this investment in order to achieve an 11% accounting rate of return?
64) Pro-Am Audio is a company that is contracted to DJ private events. Due to a recent increase in bookings, Pro-Am is considering the purchase of another mobile DJ unit. Pro-Am uses the payback method to evaluate its investments. The mobile DJ unit will cost $12,000, has a useful life of 10 years, and will generate $2,000 in net cash inflows per year. The residual value of the unit is $1,000. What is the payback period for the mobile DJ unit?
A) 6.50 years
B) 5.50 years
C) 6.00 years
D) 4.00 years
65) Sparky the Electrician specializes in rewiring historic houses. Sparky recently purchased a new wire-pulling device that will decrease the time to complete each job and increase total revenues. The device will cost $4,375 and will increase net cash flows by $1,750 per year. The new device has a useful life of 7 years and a residual value of $250. What is the payback period for the new wire-pulling device?
A) 2.64 years
B) 2.50 years
C) 2.36 years
D) 2.19 years
66) Bonneville Manufacturing is considering an investment that would require an initial net investment of $650,000. The following revenues/expenses relate exclusively to the investment:
Total fixed expenses$88,000
The investment will have a residual value of $50,000 at the end of its 15 year useful life. What is the payback period for this investment?
A) 1.86 years
B) 3.07 years
C) 2.93 years
D) 2.48 years
67) GlenGary Investment Corporation is analyzing a proposal to build condo units in southern Florida. The project will require an initial investment of $500,000. The building has a useful life of 20 years, a residual value of $200,000, and is depreciated on a straight-line basis. GlenGary uses the accounting rate of return model to evaluate investment projects. What is the minimum annual operating income that must be generated by this project to achieve the 9% accounting return required by GlenGary?
68) Globe Enterprises purchased a new machine with a total cost of $30,450 and a useful life of 6 years. The machine will produce net cash inflows of $7,250 over its useful life and has a residual value of $2,125. What is the payback period for the new machine?
A) 4.49 years
B) 3.91 years
C) 4.20 years
D) 3.25 years
69) Siesta Manufacturing has asked you to evaluate a capital investment project. The project will require an initial investment of $88,000. The life of the investment is 7 years with a residual value of $4,000. If the project produces net annual cash inflows of $16,000, what is the accounting rate of return?
70) Abdul Corporation bought a new machine, which cost $90,000, has a useful life of 10 years, and will generate annual cash inflows of $25,000. The residual value of the machine is $5,500. What is the payback period?