1. Torben Corporation has provided the following information concerning a capital budgeting project:

Investment required in equipment	$	282,000
Expected life of the project		4
Salvage value of equipment	$	0
Annual sales	$	585,000
Annual cash operating expenses (including both variable and fixed expenses)	$	423,000

The companys income tax rate is 30% and its discount rate is 11%. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.

The total after-tax cash flow in year 2 is:

A. $134,550

B. $77,000

C. $162,000

D. 91,500

2. Jessie Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):

Investment required in equipment	$	37,000
Annual cash inflows	$	8,800
Salvage value of equipment	$	0
Life of the investment		15	years

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

The internal rate of return of the investment is closest to:

A. 23%

B. 21%

C. 27%

D. 25%