GSU ACCT 2102 - Final Exam Review Spring 2018 (31 pages)

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Final Exam Review Spring 2018



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Final Exam Review Spring 2018

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Pages:
31
School:
Georgia State University
Course:
Acct 2102 - Prin of Acct Ii

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Final Exam Review Spring 2018 1 When a company invests in a capital asset recouping the original investment is called return on investment Unit 9 1 LO1 False When a company invests in a capital asset recouping the original investment is called return of investment 1 2 Capital budgeting decisions involve both outflows of cash at one or more times and inflows of cash at other times Unit 9 2 LO2 True LO 2 Bloom K Unit 9 2 Difficulty Easy Min 1 AACSB Analytic AICPA FN Decision Modeling AICPA PC Problem Solving and Decision Making IMA Investment Decisions 2 3 A dollar received today is a Worth less than a dollar received in the future discounted at 12 interest b Worth more than a dollar received at any time in the future c Worth less than a dollar received in the future if the current interest rate is lower than the anticipated future interest rate d None of these answer choices are correct Unit 9 2 LO2 B 3 4 Dina Jones just learned that she received an inheritance from her grandmother The inheritance provides for Dina to receive 5 000 per year at the end of the year for each of the next 5 years Using the following factors what is the value of this inheritance to Dina today Type of cash flow PV of 1 FV of 1 n Periods 5 5 i Interest rate 10 10 PV ordinary annuity 5 10 FV ordinary annuity 5 10 PV annuity due 5 10 a b c d 15 523 20 849 18 954 30 526 Unit 9 2 LO2 C 4 Factor 62092 1 6105 1 3 7907 9 6 1051 0 4 16986 LO 2 Bloom C Unit 9 2 Difficulty Easy Min 2 AACSB Analytic AICPA FN Measurement AICPA PC Problem Solving and Decision Making IMA Cost Management Solution 5 000 x 3 79079 18 954 5 Welcher Inc plans to purchase equipment with a cost of 142 500 The company expects annual cash inflows from the equipment of 30 000 The equipment has an estimated life of 8 years no estimated salvage life and a required rate of return is 6 The payback period for the equipment is closest to a 1 year b 1 5 years c 5 years d 8 years Unit 9 4 LO5 C LO 5 Bloom AP Unit 9 4 Difficulty Easy Min 3



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