1). RNXD Inc. has the opportunity to market a product for 5 years under a specialty contract. The product will provide the company with net cash flows of $40,000. The investment calls for an initial working capital investment $280,000. The investment also calls for the purchase of equipment for $200,000. The machinery will have a salvage value of $45,000 at the end of the contract. RNXD Inc. is subject to a 16% discount rate. The net present value of this investment opportunity is:

A. $74,720

B. $14,170

C. $187,200

D. $194,340

2). A local machine shop purchased a new milling machine yesterday for $75,180 which is expected to generate annual cash savings of $12,000 for the next sixteen years after which the machine will have no salvage value. What is the machine's internal rate of return?

A. 8%

B. 9.5%

C. 12%

D. 14%