1.

Scott Smith just bought a new StreamLink machine which will be depreciated on a straight-line basis to a book value of $67,000 at the end of its four-year life. During the first two years, the net income associated with the machine is expected to be $15,400 and $18,150, respectively. During the last two years, the net income associated with the equipment is expected to be $23,500 and $15,300, respectively. What is the average-accounting return associated with the StreamLink machine? Please note that Scott paid $175,000 for the machine.

Multiple Choice

• 14.95%

• 16.02%

• 20.67%

• 18.34%

• 8.27%

2.

The town of Punxsutawney, PA just invested $374,000 to refurbish Gobblers Knob (a well-known tourist attraction in the area). The Gobblers Knob project is expected to produce cash inflows of $47,700 for 12 years and a cash inflow of $63,100 in Year 13. If Punxsutawneys cost of capital is 8.8%, what is the Gobblers Knob project NPV?

Multiple Choice

• $8,048.98

• $7,885.68

• $120,846.22

• $13,030.20

• $103,509.31