Consider each part below independently. Ignore income taxes.

1.         Preston Company’s required rate of return is 14% on all investments. The company can purchase a new machine at a cost of $84,900. The new machine would generate cash inflows of $15,000 per year and have a 12-year useful life with no salvage value. Compute the machine’s net present value. (Use the format shown in Exhibit 14—1.) Is the machine an acceptable in vestment? Explain.

2.         The Walton Daily News is investigating the purchase of a new auxiliary press that has a projected life of 18 years. It is estimated that the new press will save $30,000 per year in cash operating costs. If the new press costs $217,500, what is its internal rate of return? Is the press an acceptable investment if the company’s required rate of return is 16%? Explain.

3.         Refer to the data above for the Walton Daily News. How much would the annual cash inflows (cost savings) have to be for the new press to provide the required 16% rate of return? Round your answer to the nearest whole dollar.