$1.$ Oahu Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of $5,700$ units at $$188$ per unit. The equipment has a cost of $$636,100,$ residual value of $$47,900,$ and an $8-$year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Line Item Description Amount

Cost per unit:

Direct labor $$30\mathrm{.}00$

Direct materials $116\mathrm{.}00$

Factory overhead $($including depreciation$)19\mathrm{.}80$

Total cost per unit $$165\mathrm{.}80$

Determine the average rate of return on the equipment. If required, round to the nearest whole percent.

$2.$Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $$122,000$ with a $$10,000$ residual value and a $5-$year life. The equipment will replace one employee who has an average wage of $$42,190$ per year. In addition, the equipment will have operating and energy costs of $$11,870$ per year.

Determine the average rate of return on the equipment, giving effect to straight$-$line depreciation on the investment. If required, round to the nearest whole percent.

fill in the blank $1$ of $1$

$\%$

$3.$Project $1$ requires an original investment of $$58,300.$ The project will yield cash flows of $$11,000$ per year for $5$ years. Project $2$ has a computed net present value of $$15,300$ over a $3-$year life. Project $1$ could be sold at the end of $3$ years for a price of $$54,000.$

Use the Present Value of $$1$ at Compound Interest and the Present Value of an Annuity of $$1$ at Compound Interest tables shown below.

Present Value of $$1$ at Compound Interest

Year $6\%10\%12\%15\%20\%$

$10\mathrm{.}9430\mathrm{.}9090\mathrm{.}8930\mathrm{.}8700\mathrm{.}833$

$20\mathrm{.}8900\mathrm{.}8260\mathrm{.}7970\mathrm{.}7560\mathrm{.}694$

$30\mathrm{.}8400\mathrm{.}7510\mathrm{.}7120\mathrm{.}6580\mathrm{.}579$

$40\mathrm{.}7920\mathrm{.}6830\mathrm{.}6360\mathrm{.}5720\mathrm{.}482$

$50\mathrm{.}7470\mathrm{.}6210\mathrm{.}5670\mathrm{.}4970\mathrm{.}402$

$60\mathrm{.}7050\mathrm{.}5640\mathrm{.}5070\mathrm{.}4320\mathrm{.}335$

$70\mathrm{.}6650\mathrm{.}5130\mathrm{.}4520\mathrm{.}3760\mathrm{.}279$

$80\mathrm{.}6270\mathrm{.}4670\mathrm{.}4040\mathrm{.}3270\mathrm{.}233$

$90\mathrm{.}5920\mathrm{.}4240\mathrm{.}3610\mathrm{.}2840\mathrm{.}194$

$100\mathrm{.}5580\mathrm{.}3860\mathrm{.}3220\mathrm{.}2470\mathrm{.}162$

Present Value of an Annuity of $$1$ at Compound Interest

Year $6\%10\%12\%15\%20\%$

$10\mathrm{.}9430\mathrm{.}9090\mathrm{.}8930\mathrm{.}8700\mathrm{.}833$

$21\mathrm{.}8331\mathrm{.}7361\mathrm{.}6901\mathrm{.}6261\mathrm{.}528$

$32\mathrm{.}6732\mathrm{.}4872\mathrm{.}4022\mathrm{.}2832\mathrm{.}106$

$43\mathrm{.}4653\mathrm{.}1703\mathrm{.}0372\mathrm{.}8552\mathrm{.}589$

$54\mathrm{.}2123\mathrm{.}7913\mathrm{.}6053\mathrm{.}3532\mathrm{.}991$

$64\mathrm{.}9174\mathrm{.}3554\mathrm{.}1113\mathrm{.}7853\mathrm{.}326$

$75\mathrm{.}5824\mathrm{.}8684\mathrm{.}5644\mathrm{.}1603\mathrm{.}605$

$86\mathrm{.}2105\mathrm{.}3354\mathrm{.}9684\mathrm{.}4873\mathrm{.}837$

$96\mathrm{.}8025\mathrm{.}7595\mathrm{.}3284\mathrm{.}7724\mathrm{.}031$

$107\mathrm{.}3606\mathrm{.}1455\mathrm{.}6505\mathrm{.}0194\mathrm{.}192$

a$.$ Determine the net present value of Project $1$ over a $3-$year life with residual value, assuming a minimum rate of return of $6\%.$ If required, round to the nearest dollar.

fill in the blank $1$ of $1$$

$15,780$