19-1:

A) A project requires an initial cash outlay of $800, and returns $1,000 at the end of year 3 (nothing at the end of years 1 or 2). What is the approximately Net Present Value of this project, using a cost of capital of 10%?

B) A project requires an initial cash outlay of $5,000, and returns $1,000 at the end of each year from Year 1 through Year 10. What is the projects approximate Internal Rate of Return.

C) Refer to the project in part (B). What is the Payback Period of the Project? Also, what is the Accounting Rate of Return on the average net investment, assuming that the $5,000 purchase price is for a machine that is depreciated using straight-line depreciation over 10 years, with zero salvage value?