Question 1 - Peter wants to buy a computer which he expects to save him $8,500 each year in bookkeeping costs. The computer will last for five years, and at the end of five years it will have no salvage value. If Peter's required rate of return is 11%, what is the maximum price Peter should be willing to pay for the computer now?
Determine the appropriate discount factor(s) using tables.
$42,500
$31,416
$28,336
$27,826
Question 2 -Which of the following benefits could an organization reasonably expect from an effective budget program?
| |
Increased
employee motivation |
Uncover
potential bottlenecks |
| (A) |
Yes |
Yes |
| (B) |
Yes |
No |
| (C) |
No |
Yes |
| (D) |
No |
No |
|
|
Option A
Option B
Option C
Option D
Question 3 - All of Porter Corporation's sales are on account. Seventy percent of the credit sales are collected in the month of sale, 15% in the month following sale, and 10% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data for the company:
| |
January |
February |
March |
April |
| Total sales |
$428,000 |
$602,000 |
$676,000 |
$860,000 |
Cash receipts in April are expected to be:
$602,000
$703,400
$763,600
$161,600