You are considering the purchase of a new machine. Your analysis includes the evaluation of two machines which have differing initial

You are considering the purchase of a new machine. Your analysis includes the evaluation of two machines which have differing initial and ongoing costs and differing lives. Whichever machine is purchased will be replaced at the end of its useful life. You should select the machine which has the:    A.  longest life. B.  highest annual operating cost. C.  lowest annual operating cost. D.  highest equivalent annual cost. E.  lowest equivalent annual cost. Refer to section 10.6

18.

The bid price is:    A.  an aftertax price. B.  the aftertax contribution margin. C.  the highest price you should charge if you want the project. D.  the only price you can bid if the project is to be profitable. E.  the minimum price you should charge if you want to earn a target return on investment. Refer to section 10.6

19.	Which one of the following will increase a bid price?    A.  a decrease in the fixed costs B.  a reduction in the net working capital requirement C.  a reduction in the firm's tax rate D.  an increase in the salvage value E.  an increase in the required rate of return Refer to section 10.6

20.

All of the following are related to a proposed project. Which of these should be included in the cash flow at time zero? I. purchase of $1,400 of parts inventory needed to support the project II. loan of $125,000 used to finance the project III. depreciation tax shield of $1,100 IV. $6,500 of equipment needed to commence the project    A.  I and II only B.  I and IV only C.  II and IV only D.  I, II, and IV only E.  I, II, III, and IV Refer to section 10.4