1. If project A has a lower internal rate of return than project B, then project A will have a

lower NPV and a shorter payback period.

higher NPV and a shorter payback period.

lower NPV and a longer payback period.

higher NPV and a longer payback period.

2. Colaw Company is considering buying equipment for $240,000 with a useful life of five years and an estimated salvage value of $12,000. If annual expected income is $21,000, the denominator in computing the annual rate of return is

$126,000.

$252,000.

$120,000.

$240,000.