1. Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:
Cost of equipment (zero salvage value)	$ 490,000
Annual revenues and costs:
Sales revenues	$ 300,000
Variable expenses	$ 130,000
Depreciation expense	$ 50,000
Fixed out-of-pocket costs	$ 40,000

Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

This proposals internal rate of return is closest to:

2. Assume that a company is considering purchasing a machine for $50,000 that will have a five-year useful life and a $5,000 salvage value. The machine will lower operating costs by $16,750 per year. The companys required rate of return is 19%. The net present value of this investment is closest to:

3. Assume that a company is considering purchasing a machine for $45,000 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The companys required rate of return is 18%. The profitability index for this investment is closest to: