1. Annual income divided by the average investment amount in a project, is the:

Accounting rate of return.

Net present value rate.

Profit rate.

Payback rate.

Earnings from investment.

2. A company is considering the purchase of a new piece of equipment for $95,000. It is expected to produce the following net cash flows. The payback period is:

	Year 1	Year 2	Year 3	Year 4	Year 5
Net cash flows	$ 38,500	$ 32,500	$ 20,500	$ 14,500	$ 8,500

		4.24 years.
		2.64 years.
		2.92 years.
		2.47 years.
		3.24 years.