1) Garrett Boone, Bridgeport Enterprises vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of $233,282 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by $24,000 per year. He also believes the lathe will reduce energy costs by $6,000 per year. If he purchases the new lathe, he will be able to sell the old lathe for $5,100. (a) Calculate the lathes internal rate of return. (Round answer to 0 decimal places, e.g. 25%.)

2) Payton and Finley Davis run a real estate brokerage firm. They have just moved into a new building and want to add some outdoor digital signage to advertise the firms services. The sign they are considering has two display areas that can display two different images at the same time and costs $181,200. It is expected to have a useful life of 6 years. In an effort to recoup the cost of the sign, Payton and Finley will rent one display panel to other tenants in the building for $56,678 a year. Electricity to power the sign is expected to be $1,110 per year.

(a)

Calculate the annual net operating income generated by the new sign.

b) Accounting rate of return