1.A company is considering purchasing a machine for $85,000. The machine is expected to generate annual income of $11,250 per year. Depreciation expense would be $8,500 per year. What is the payback period for this machine?

2. A company produces two boat models, Flyer and Skimmer. Both products are being considered for major investment projects next year. Relevant data follow:

	Flyer	Skimmer
Initial investment	$ 424,000	$ 380,000
Expected net cash flows:
Year 1	150,000	130,000
Year 2	160,000	130,000
Year 3	170,000	130,000

Required: (1) Compute the payback period for both investment projects. (2) Which project should be chosen based on payback period?

3. A company purchases a machine for $800,000. The machine has an expected life of 9 years and no salvage value. The company anticipates an annual income of $60,000 to be received uniformly throughout each year. What is the accounting rate of return?