IMANET CMA Practice Test : Free Online Preparation

Free IMANET CMA Exam Questions

The Moore Corporation is considering the acquisition of a new machine. The machine can be

purchased for $90,000; twill cost $6,000 to transport to Moore’s plant and $9,000 to install. It is

estimated that the machine will last 10 years, and it is expected to have an estimated salvage value

of $5,000. Over its 10-year life, the machine is expected to produce 2,000 units per year with a selling

price of $500 and combined material and labor costs of $450 per unit. Federal tax regulations permit

machines of this type to be depreciated using the straight-line method over 5 years with no

estimated salvage value. Moore ha a marginal tax rate of 40%. What is the net cash flow for the tenth

year of the project that Moore Corporation should use in a capital budgeting analysis?

Donnelly Corporation manufactures and sells T-shirts imprinted with collage names and slogans. Last

year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit,

The company needed to sell 20.000 shirts to break even. The net income last year was $5,040.

Donnelly’s expectations for the coming year include the following:

• The sales price of the T-shirts will be $9

• Variable cost to manufacture will increase by one-third

• Fixed costs will increase by 10%

• The income tax rate of 40% will be unchanged

Sales for the coming year are expected to exceed last year’s by 1000 units. If this occurs. Donnelly’s

sales volume in the coming year will be?

The capital budgeting model that is generally considered the best model for long-range decision