Each of the following parts is independent. Assume all cash flows are after-tax cash flows.

1. Troy Adams has purchased a trencher for $250,000. He expects to receive an after-tax income of $62,500 per year from the investment. What is the payback period for Troy?

2. Melissa Nealy invested $100,000 in a coin-operated laundry facility. The facility has a 10-year life expectancy with no expected salvage value. The laundry facility will pro-

duce a net cash flow of $30,000 per year. What is the accounting rate of return? Use original investment for the computation.
3. Royalty Manufacturing is considering the purchase of a robotics material handling sys¬
tem. The cash benefits will be $250,000 per year. The system costs $1,450,000 and will last 10 years. Compute the NPV assuming a discount rate of 12%. Should the company buy the robotics system?
4. Bill Jackson has just invested $150,000 in a restaurant specializing in Mexican food. He expects to receive $24,150 per year for the next 8 years. His cost of capital is 8%. Com¬
pute the internal rate of return. Did Bill make a good decision?