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2. Mountain Frost is considering a new project with an initial cost of $245,000. The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project. The projected net income for each year is $20,800, $21,700, $24,600, and $17,700, respectively. What is the average accounting return?

17.31%

18.54%

12.98%

15.86%

8.65%

3. Filter Corp. has a project available with the following cash flows:

Year	Cash Flow
0	?$13,900
1	6,800
2	8,100
3	3,700
4	3,300

What is the project's IRR?

26.93%

27.62%

25.90%

24.86%

29.00%

4. You are evaluating two projects with the following cash flows:

Year	Project X			Project Y
0	?$552,600			?$521,000
1	217,700			207,400
2	227,600			217,200
3	234,800			225,100
4	194,500			185,900

What is the crossover rate for these two projects?

21.59%

22.29%

10.20%

.70%

9.28%

5. A project has the following cash flows :

Year	Cash Flows
0	?$10,700
1	4,510
2	6,460
3	4,000
4	?1,840

Assuming the appropriate interest rate is 9 percent, what is the MIRR for this project using the discounting approach?

12.96%

8.87%

10.37%

10.64%

12.10%

6. POD has a project with the following cash flows:

Year	Cash Flows
0	?$245,000
1	147,300
2	164,800
3	129,900

The required return is 8.6 percent. What is the profitability index for this project?

1.282

.650

1.410

.813

1.538

7. A project that will last for 9 years is expected to have equal annual cash flows of $101,800. If the required return is 8.9 percent, what maximum initial investment would make the project acceptable?

$588,606.23

$1,319,998.15

$565,544.80

$527,841.82

$612,805.15

8. McCanless Co. recently purchased an asset for $2,000,000 that will be used in a 3-year project. The asset is in the 4-year MACRS class. The depreciation percentage each year is 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. What is the amount of depreciation in Year 2?

$666,600

$296,200

$148,200

$889,000

$666,667

9. A company purchased an asset for $3,400,000 that will be used in a 3-year project. The asset is in the 3-year MACRS class. The depreciation percentage each year is 33.33 percent, 44.45 percent, and 14.81 percent, respectively. What is the book value of the equipment at the end of the project?

$2,266,780

$3,148,060

$0

$755,480

$251,940

10. Bi-Lo Traders is considering a project that will produce sales of $44,800 and have costs of $25,700. Taxes will be $4,500 and the depreciation expense will be $2,650. An initial cash outlay of $2,100 is required for net working capital. What is the project's operating cash flow?

$17,250

$11,950

$12,500

$14,600

$9,850

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