1. Which of the following capital decision methods shows the


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1. Which of the following capital decision methods shows the excess or deficiency of the asset’s present value of net cash inflows over its initial investment cost? A. Accounting Rate of Return B. Internal Rate of Return C. Net Present Value D. Payback method 2 Cemenza Company is considering the purchase of a new machine. The machine cost $227,500 and will generate a yearly cash inflow of $35,000. What is the payback period? A. 5 years and 11 months B. 6 years and 6 months C. 7 years and 1 month D. 8 years and 3 months 3 A manufacturing company purchased a new machine for $150,000. The machine will last ten years and will be depreciated using the straight-line method. The estimated salvage value of the machine is zero and should generate a yearly cash inflow of $39,000. Ignoring taxes, what is the accounting rate of return? A. 14% B. 15% C. 16% D. 17%

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