Grace Corp

question 30

Multiple Choice

Grace Corp. ,whose required rate of return is 10%,is considering the purchase of a new piece of equipment.The internal rate of return of the project,which has a life of 8 years,is 12%.The project would have:

• A)an accounting rate of return greater than 10%.
• B)a payback period more than 8 years.
• C)a net present value of zero.
• D)a net present value greater than zero.

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Definitions:

Perpetual Inventory System

An inventory tracking system that updates the balance of inventory continuously with each sale or purchase.

Inventory Ledger

A document or system that tracks the quantities, costs, and types of a company's inventory on hand, including goods in transit and on order.

Determining Cost of Inventory

Involves valuing the items sold and those remaining in stock by allocating costs based on specific identification, FIFO, LIFO, or weighted average methods.

FIFO

"First In, First Out," an inventory valuation method where goods first added to inventory are the first ones to be used or sold.