1. Carmel Corporation is considering the purchase of a machine costing $55,000 with a 8-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment?

2. The following present value factors are provided for use in this problem.

Periods	Present Value of $1 at 8%			Present Value of an Annuity of $1 at 8%
1		0.9259			0.9259
2		0.8573			1.7833
3		0.7938			2.5771
4		0.7350			3.3121

Xavier Co. wants to purchase a machine for $38,000 with a four year life and a $1,100 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $13,000 in each of the four years. What is the machine's net present value?

3. A company is considering the purchase of new equipment for $63,000. The projected annual net cash flows are $25,600. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 10% return on investment. The present value of an annuity of $1 for various periods follows:

Period	Present value of an annuity of $1 at 10%
1	0.9091
2	1.7355
3	2.4869

What is the net present value of this machine assuming all cash flows occur at year-end?