Question 1
Which of the following does
not use interest expense as a component of amounts in its computations?
◦ Net present value using tables
◦ Net present value using Excel
◦ Internal rate of return
◦ Required rate of return
Question 2
Braxton Manufacturing is considering the purchase of new computerized equipment. The machine costs $85,000 and would generate $22,000 in annual cost savings over its 5-year life. At the end of 5 years, the equipment would have a $5,000 salvage value. Braxton's required rate of return is 12%. Using the interest tables, the machine's net present value is nearest
◦ ($2,857).
◦ $79,306.
◦ ($5,694).
◦ $110,000.