1) World Domination Enterprises is considering the purchase of equipment with a cost of $800,000, a salvage value

of $100,000, and an estimated useful life of 5 years. World Domination depreciates all equipment using the

straight-line method. Additionally, it expects to be subject to a tax rate of 25% in all 5 years.

World Domination projects the following gross cash flows directly resulting from equipment operations:

Year 1 $ 260,000

Year 2 370,000

Year 3 310,000

Year 4 270,000

Year 5 190,000

World Domination uses a time value of money rate of 9% for decision-making purposes.

A) Calculate the payback period of the investment in the equipment.

B) Calculate the net present value of the investment in the equipment.

C) Calculate the profitability index of the investment in the equipment.