1.

Consider the following cash flows associated with a project:

Year	Cash Flows
0	$127,900
1	47,600
2	63,800
3	51,600
4	28,100

Assume the required return is 8.4 percent. Calculate the project's profitability index for this project?

2. Ross Properties has determined that the machinery they currently use will wear out in 17 years. To replace the new machine when it wears out, the company wants to establish a savings account today. If the interest rate on the account is 1.9 percent compounded quarterly and the cost of the machinery will be $340,000, how much will the company have to deposit today?

3. Please consider this project that costs $20,000 today will generate cash flows of $6,500 per year for seven years. Calculate the project's payback period?