1. If a 2-year capital project has an internal rate of return factor equal to 1.69 and net annual cash flows of $42000, the initial capital investment was

$24852.

$49704.

$70980.

$35490.

2.

A company projects an increase in net income of $94500 each year for the next five years if it invests $900000 in new equipment. The equipment has a 5-year life and an estimated salvage value of $300000. What is the annual rate of return on this investment?

15.8%

38.0%

3.

A company is considering purchasing a machine that costs $600000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $200000 and annual operating expenses exclusive of depreciation expense are expected to be $46000. The straight-line method of depreciation would be used. The cash payback period on the machine is

4.9 years.

3.9 years.

2.3 years.

8.0 years.

30.0%

10.5%