Quattro,Inc

question 9

Multiple Choice

Quattro,Inc.has the following mutually exclusive projects available.The company has historically used a four-year cutoff for projects.The required return is 11 percent. The payback for Project A is ____ while the payback for Project B is ____.The NPV for Project A is _____ while the NPV for Project B is ____.Which project,if any,should the company accept?

• A)3.92 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B
• B)3.92 years; 3.79 years; -$211.60; $1,211.48; accept Project B only
• C)3.92 years; 3.79 years; $780.85; -$7,945.93; accept Project A only
• D)4.06 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B
• E)4.06 years; 3.79 years; -$211.60; -$7,945.93; reject both projects

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Definitions:

Manufacturing Costs

The total costs involved in making products which can include direct materials, direct labor, and manufacturing overhead.

Direct Material

These are the raw materials and components that are consumed directly in the manufacture of a product.

Variable Overhead

Costs that vary in total in direct proportion to changes in activity level or volume, such as utility costs or raw materials that fluctuate with production levels.

Factory Depreciation

The decrease in value of manufacturing equipment and facilities over time due to wear and tear or obsolescence.