Melnik Company wants to buy a new machine costing $960,000. The equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:

Required:
1. Compute the payback period for the equipment.
2. Compute the equipment's ARR.
3. Compute the investment's NPV, assuming a required rate of return of 10 percent.
4. Compute the investment's IRR.

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Cash Revenues Cash Expenses Year 1 2 3 $1,275,000 $900,000 900,000 900,000 1,275,000 1,275,000 900,000 900,000 1,275,000