1. You buy a new piece of equipment for $26,634, and you receive a cash inflow of $4,300 per year for 12 years. Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Internal rate of return: %

2. Telstar Communications is going to purchase an asset for $700,000 that will produce $340,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 1212. (This represents four years of depreciation based on the half-year convention.) The firm is in a 34 percent tax bracket.

	Year 1	Year 2	Year 3	Year 4
Earnings before depreciation and taxes
Depreciation
Earnings before taxes
Taxes
Earnings after taxes
Depreciation
Cash flow