1.) A company is considering investing in equipment that costs $660,000. The equipment will be depreciated on the straight-line basis over an eight-year period with a residual value of $120,000. The investment is expected to generate annual net cash inflows of $135,000 for 8 years. Using the rate of return model, what is the minimum average annual operating income that must be generated from this investment in order to achieve a 14% rate of return?

2.) A company is considering an investment in new equipment costing $360,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $70,000 the first year, $80,000 the second year, and $120,000 every year after until the fifth year. What is the payback period for this investment? The residual value is zero.

3.) A company is evaluating an investment of $1,000,000 which will yield cash flows of $257,000 per year for 5 years with no residual value. The company has a hurdle rate of 10%. What is this investments internal rate of return? Should the company accept this investment?