10. Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project? 11. Ralston Consulting, Inc., has a $25,000 overdue debt with Supplier No. 1. The company is low on cash, with only $7,000 in the checking account and does not want to borrow any more cash. Supplier No. 1 agrees to settle the account in one of two ways: Option 1: Pay $7,000 now and $23,750 when some large projects are finished, two years from today. Option 2: Pay $35,000 three years from today, when even larger projects are finished. Assuming that the only factor in the decision is the cost of money (8%), which option should Ralston choose? (15 Points) 12. Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value. (15 Points) Project X Project Y Initial investment $180,000 $118,000 Net cash flows anticipated: Year 1 82,000 35,000 Year 2 59,000 55,000 Year 3 92,000 72,000 Year 4 81,000 68,000 Year 5 76,000 27,000 Compute the IRR for both projects and recommend one of them. 13.A bookstore is planning to purchase an automated inventory/remote marketing system, which includes an upgrade to a more sophisticated cash register system. The package has an initial investment cost of $360,000. It is expected to generate $144,000 of annual cash flows, reduce costs and provide incremental cash revenues of $326,000, and incur incremental cash expenses of $200,000 annually. What is the payback period and accounting rate of return (ARR)? (15 Points) 14.Would you rather have $7,500 today or at the end of 20 years after it has been invested at 15%? Explain your answer. (15 Points) 15. D&M Pizza has a delivery car that is uses for pizza deliveries. The transmission needs to be replaced, and there are several other repairs that need to be done. The car is nearing the end of its life, so the options are to either overhaul the car or replace it with a new car. D&M's has put together the following budgetary items: Present Car New Car $30,000 $6,500 Purchase cost new Transmission and repairs Annual cash operating cost Fair market value now Fair market value in five years 7,500 8,500 6,000 1,000 6,000 If D&M replaces the transmission of the pizza delivery vehicle, they expect to be able to use the vehicle for another 5 years. If they purchase a new vehicle, they will sell the existing one and use the new vehicle for 5 years and then trade it in for another new pizza delivery vehicle. If they trade for the new delivery vehicle, their operating expenses will decrease because the new vehicle is more gas efficient. This project is analyzed using a discount rate of 15%. What should D&M do? (15 Points)