1. Your boss has told you to evaluate the cash flows for Machine 1 and Machine 2, using the payback period method. Which machine are you going to recommend? Justify your answer.

2. You are considering an investment that requires you to lay out $14,800 and has the cash inflows shown below. Use a 3% interest rate to find the net present value and determine whether you should invest. Justify your answer.

Year Machine 1 Machine 2 (52,550) (40,000) 10,000 9,000 10,100 9,025 3 10,450 9,030 4 22,000 9,045 51 20,000 9,099 Year Cash flow 4,567 6,789 5,678 2,345 1,234 3 5