1. Determine the average rate of return for a project that is estimated to yield total income of $143,100 over three years, has a cost of $547,000, and has a $89,000 residual value. Round to the nearest whole number. ___?___%

2. The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $220,000. The manager believes that the new investment will result in direct labor savings of $44,000 per year for 10 years.

Present Value of an Annuity of $1 at Compound Interest
Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	1.833	1.736	1.690	1.626	1.528
3	2.673	2.487	2.402	2.283	2.106
4	3.465	3.170	3.037	2.855	2.589
5	4.212	3.791	3.605	3.353	2.991
6	4.917	4.355	4.111	3.785	3.326
7	5.582	4.868	4.564	4.160	3.605
8	6.210	5.335	4.968	4.487	3.837
9	6.802	5.759	5.328	4.772	4.031
10	7.360	6.145	5.650	5.019	4.192

a. What is the payback period on this project? fill in the blank 1 years

b. What is the net present value, assuming a 12% rate of return? Use the table provided above. Round to the nearest whole dollar.

Net present value

$___?___

c. What else should the manager consider in the analysis?

(Depreciation) (Taxes and Maintenance costs) (Depreciation and Taxes) (Maintenance costs) or (Taxes)