7. CardinalCompany purchased a new machine for $125,000. The machine will lasteight years and will be depreciated using the straight-line method.The estimated residual value of the machine is zero and shouldgenerate a yearly cash inflow of $30,000. Ignoring taxes, what isthe accounting rate of return?
A. 3.65%
B. 11.50%
C. 23.00%
D. 24.00%
9. Which ofthe following is NOT a factor when considering the time value ofmoney?
A. The interest rate
B. The principal amount
C. The payback period
D. The number of periods
10. The final step inthe capital budgeting process is to:
A. identify potential capital investments.
B. engage in capital rationing, if necessary, to choose amongalternative investments.
C. utilize decision rules when screening out undesirableinvestments.
D. perform post-audits after making capital investments.
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