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NEW QUESTION: 1
Drag and Drop Question

Answer:
Explanation:

NEW QUESTION: 2
In order to increase production capacity, Gunning Industries is considering replacing an existing
production machine with a new technologically improved machine effective January 1, 1997. The
following information is being considered by Gunning Industries.
. The new machine would be purchased for $160,000 in cash. Shipping, installation, and testing would
cost an additional $30,000.
. The new machine is expected to increase annual sales by 20,000 units at a sales price of $40 per unit.
Incremental operating costs are comprised of $30 per unit in variable costs and total fixed costs of
$ 40,000 per year.
. The investment in the new machine will require an immediate increase in working capital of $35,000.
. Gunning uses straight-line depreciation for financial reporting and tax reporting purposes. The new
machine has an estimated useful life of five years and zero salvage value.
. Gunning is subject to a 40 percent corporate income tax rate.
Gunning uses the net present value method to analyze investments and will employ the following factors
and rates.

Gunning Industries' net cash outflow in a capital budgeting decision would be:
A. $195,000
B. $204,525
C. $190,000
D. $225,000
Answer: D
Explanation:
Choice "d" is correct. $225,000 net cash outflow.

Choices "a", "b", and "c" are incorrect, per the above calculation.
Note: This question is the first from a series of questions on a prior exam. The last in the series is
presented for you in the regular homework questions (not the supplemental questions) for this chapter.

NEW QUESTION: 3
You create an Incremental accrual absence plan with a Monthly Accrual Processing Period, a flat accrual rate of 2.5 hours, a waiting period of 2 months, and a vesting period of 1 month.
How much accrual will be available to an employee for use two months after he or she has been enrolled into the accrual plan?
A. 0
B. 1
C. 2
D. 2.5
E. 7.5
Answer: D