1. A new machine costs $100,000 and has a 4-year useful life. If you buy this machine today, you estimate additional cash inflows from sales of $55,000 in year 1, $40,000 in year 2, and $5,000 in year 3. What is the payback period on the project?

2. You are considering purchasing a new machine for the company in 3-years. The company has decided to reserve cash today in the lump sum amount of $50,000 for this initiative. If you can earn 10% interest, what is the cost of the machine that you could afford to buy in 3-years?