12.1a) Q 12.24:Managers at Eller Manufacturing are considering purchasing a new delivery van.The van has a 3.75 year payback period and its initial cost is $25,000.Determine the missing cash flow from the list below.Year 1:$6,000Year 2:$8,000Year 3:$8,000Year 4:$?

Year 5:$9,000

• A
• :
• $2,250
• B
• :
• $6,000
• C
• :
• $4,000
• D
• :
• $12,000

b) Captain Candy Company is choosing between the following two investments and requires a payback period of 3 years or less. The Lolly Land project requires an initial investment of $100,000 while the Jelly Baby project requires an initial investment of $20,000.

Which project should Captain Candy Company accept based on the payback period method?

• A
• :
• both Jelly Baby and Lolly Land
• B
• :
• Jelly Baby
• C
• :
• neither Lolly Land nor Jelly Baby
• D
• :
• Lolly Land

C) Kensington, Inc. is considering an investment in new equipment.The equipment has a 5.25 year payback period and it has equal annual cash flows.The equipment has no salvage value and will be depreciated straight-line over its 8-year useful life.If the new equipment's initial cost is $33,600, what are the equal annual cash flows?

• A
• :
• $6,720
• B
• :
• $2,200
• C
• :
• $4,200
• D
• :
• $6,400