b. note: plz answer both questions as chegg policy has changed, if both questions are not answered i will downvote and report

Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $504,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $63,000. The company's minimum desired rate of return for net present value analysis is 12%. Present Value of an Annuity of $1 at Compound Interest Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. x% Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Present Value of $1 at Compound Interest b. The cash payback period. c. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar. If required, use a minus sign to indicate negative net present value for current grading purpose. Feedback Check My Work a. Divide the estimated average annual income by the average investment. Net cash flow less the annual depreciation expense equals average annual income. Investment cost divided by two equals average investment. b. Divide the amount to be invested by the annual net cash inflow. c. Subtract the cost from the present value of the annual net cash flow. (Use the present value of an annuity factor for 10 periods at 12%, refer Exhibit 5 in the text.) 1. Assuming that the desired rate of return is 10%, prepare a net present value analysis for each proposal. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar. 2. Determine a present value index for each proposal. If required, round your answers to two decimal places. 3. The has the largest present value index. Although has the largest net present value, it returns less present value per dollar invested than does the , as revealed by the present value indexes. The present value index for the is less than 1 , indicating that it does not meet the minimum rate of return standard