71) The cost of capital for the firm is

A) 8%.

B) 6%.

C) 10%.

D) 12%.

72) Using the cost capital as the discount rate, the net present value of the project is

A) $89,360.

B) $108,480.

C) $114,680.

D) $228,180.

73) The approximate internal rate of return of the project is

A) 8%.

B) 12%.

C) 12.5%.

D) 14%.

74) Miller Manufacturing has acquired a new parcel van to transport packages from the airport to its sales offices for $20,000.  The van is a class 10 item which has a capital cost allowance rate of 30%.  The company plans to use the van for five years and then sell it for an expected salvage value of $4,000.  The capital cost allowance for the first year would be

A) $3,000.

B) $6,000.

C) $5,100.

D) $3,500.

75) The amount of the capital cost allowance for the second year for Mike Manufacturing would be

A) $3,000.

B) $6,000.

C) $5,100.

D) $3,500.

Use the following information regarding a production asset to answer the next question(s).

Acquisition Costs

$25,000

Annual Cash Inflow from Operations

6,000

Annual Operating Costs

2,000

Expected Salvage Value

5,000

Cost of Capital

14%

Capital Cost Allowance Rate

30%

Tax Rate

40%

Useful Life of Equipment

5 years

76) The capital cost allowance for the first year would be

A) $3,750.

B) $6,375.

C) $7,500.

D) $4,463.

77) The tax savings from the capital cost allowance in the second year would be

A) $1,500.

B) $2,550.

C) $3,000.

D) $2,000.

78) The annual after-tax cash inflow from operations would be

A) $1,200.

B) $2,400.

C) $2,800.

D) $3,600.

79) The annual after-tax operation costs would be

A) $1,000.

B) $1,200.

C) $1,500.

D) $2.000.

80) The present value of equipment salvage value at the end of the five years would be

A) $4,000.

B) $5,000,

C) $2,076,

D) $2,595,

81) The net present value of the project would be

A) $12,595.

B) $10,900.

C) $11,162.

D) $13,912.



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