1) Your firm is considering a project that has the following set of cash flows:

YearCash Flow

0-$100,000

130,000

240,000

350,000

480,000

What is the (regular) payback period for this project?

2)If the required rate of return for the project in problem 1 is 15%, what is the discounted payback period for the project?

3)A firm is planning to install new equipment to the existing manufacturing facility to improve the production efficiency.The equipment costs $1,000,000, which will be depreciated straight line to zero over its five-year life. The investment is expected to generate net incomes of $40,000, $50,000, $70,000, $90,000, and $100,000 for year 1, year 2, year 3, year 4, and year 5, respectively. Calculate the average accounting return (AAR).