Beta Company has the following information:
Number of Years 
5 
10 
15 
Amount of annual cash inflow 
$8,000 
(c) 
$ 4,200 
Required initial investment 
(a) 
$100,000 
$32,000 
Internal rate of return 
8 percent 
10 percent 
(e) 
Minimum desired rate of return 
10 percent 
(d) 
8 Percent 
Net present value 
(b) 
$ 5,200 
(f) 
21) What is (a)?
A) $31,944
B) $30,328
C) $11,747
D) $12,882
22) What is (b)?
A) $0
B) $(1,616)
C) $20,197
D) $19,062
23) What is (c)?
A) $38,599
B) $94,800
C) $16,273
D) $ 5,200
24) What is (d)?
A) Less than 6 percent
B) Between 6 and 8 percent
C) Between 8 and 10 percent
D) Between 10 and 12 percent
25) What is (f)?
A) $ 3,948
B) $35,948
C) $ 4,200
D) $(6,013)
26) What is (e)?
A) Below 6 percent
B) Between 6 and 8 percent
C) Between 8 and 10 percent
D) Between 10 and 12 percent
Below are two potential investment alternatives:
Case X 
Case Y 

Initial capital investment 
$90,000 
$150,000 
Estimated useful life 
3 yrs. 
3 yrs. 
Estimated terminal salvage value 
0 
0 
Estimated annual savings in cash operating costs 
$ 36,000 
$ 58,000 
Minimum desired rate of return 
10 percent 
12 percent 
PV of $1 (3 years) 
PV of an Annuity of $1 (3 years) 

8 percent 
0.7938 
2.5771 
10 percent 
0.7513 
2.4869 
12 percent 
0.7118 
2.4018 
14 percent 
0.6750 
2.3216 
16 percent 
0.6407 
2.2459 
27) Assume straightline amortization in all computations, and ignore income taxes.
The internal rate of return in case A is approximately
A) 8 percent.
B) 10 percent.
C) 12 percent.
D) 14 percent.
28) There are two key aspects of capital budgeting: (1) investing decisions and (2)
A) accounting decisions.
B) financing decisions.
C) discount decisions.
D) payback decisions.
Below are two potential investment alternatives:
Case X 
Case Y 

Initial capital investment 
$90,000 
$150,000 
Estimated useful life 
3 yrs. 
3 yrs. 
Estimated terminal salvage value 
0 
0 
Estimated annual savings in cash operating costs 
$ 36,000 
$ 58,000 
Minimum desired rate of return 
10 percent 
12 percent 
PV of $1 (3 years) 
PV of an Annuity of $1 (3 years) 

8 percent 
0.7938 
2.5771 
10 percent 
0.7513 
2.4869 
12 percent 
0.7118 
2.4018 
14 percent 
0.6750 
2.3216 
16 percent 
0.6407 
2.2459 
29) Assume straightline amortization in all computations, and ignore income taxes.
The internal rate of return in case B is approximately
A) 14 percent.
B) 12 percent.
C) 10 percent.
D) 8 percent.
Below are two potential investment alternatives:
Case X 
Case Y 

Initial capital investment 
$120,000 
$180,000 
Estimated useful life 
3 yrs. 
3 yrs. 
Estimated terminal salvage value 
0 
0 
Estimated annual savings in cash operating costs 
$ 50,000 
$ 80,000 
Minimum desired rate of return 
10 percent 
12 percent 
PV of $1 (3 years) 
PV of an Annuity of $1 (3 years) 

8 percent 
0.7938 
2.5771 
10 percent 
0.7513 
2.4869 
12 percent 
0.7118 
2.4018 
14 percent 
0.6750 
2.3216 
16 percent 
0.6407 
2.2459 
30) Assume straightline amortization in all computations, and ignore income taxes.
The internal rate of return in case X is approximately
A) 8 percent.
B) 10 percent.
C) 12 percent.
D) 14 percent.