1. (Ignore income taxes in this problem.) Acme, Inc. is considering a project that would have a ten-year life and would require a $1,275,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows:

All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 16.5%. Required:

a. Compute the project's net present value.

b. Compute the project's internal rate of return.

c. Compute the project's payback period.

d. Compute the project's simple rate of return.

e. Based on your analysis above, should Acme, Inc. purchase this equipment? Why or why not? You must address ALL four capital budgeting methods in this answer.

2. Benner Corporation's balance sheet appears below:

The net income for the year was $53. Cash dividends were $15. Required: Prepare a statement of cash flows using the indirect method.

Sales. Less variable expenses. $1,750,000 900.000 850,000 soa Less fixed expenses: Fixed out-of-pocket cash expenses. $517,000 D 119,00036,000 119000 636,000 S 214,000 Net operating income