3. If a project has a negative net present value of ($20,480) on a $194,500, 3-year investment with a required rate of return of 10% and annual cash flows of $70,000, how much would cash flows have to increase to reach a zero net present value and the 10% desired rate of return? The present value of annuity of $1 for 3 years with a 10% required rate of return is 2.486 4. Sutton Company estimates annual net income from a new asset that will cost $219,000 and will last 12 years with a $3,000 salvage value as follows: Sales $110,000 Rent expense $ 5,000 Depreciation expense Other expenses 10,000 75,000 90,000 Net Income $20,000 years a. Compute the payback period on this project. This is computed by dividing % by (use numbers, not words). b. Compute the simple rate of return. This is computed by dividing by (use numbers, not words). c. $ If the new asset will replace an old asset that will be sold for $26,000, what amount would you use for the cost of the new asset? 5. Sutton Company has estimated the annual revenues and expenses for a project it is considering (listed below) that will cost a total of $525,000, have a ten-year useful life, and has a salvage value of $25,000. The compan requires a payback period of 6 years or less. Show your computations for each question in the areas provided under each question below. Revenues Less operating costs $300,000 Rent Insurance Depreciation Maintenance $169,000 15,000 50,000 20,000 254,000 $ 46,000 Net operating income a) Using the information above, what is the expected annual cash flow for this company? $ b) What is the payback period? Would the company consider this project? c) What is the internal rate of return to the nearest percent? % (between and %) HINT: For this answer, there are no further computations since you already have the payback period. You need to find the answer in the PV table above. You can estimate the amount if the exact number isn't there. d) What is the simple rate of return promised by the project? If the company requires a simple rate of return of at least 8%, will the games be purchased