1.An expansion at Fidell, Inc., would increase sales revenues by $75,000 per year and cash operating expenses by $38,000 per year. The initial investment would be for equipment that would cost $135,000 and have a 5 year life with no salvage value. The annual depreciation on the equipment would be $27,000. The simple rate of return on the investment is closest to:

A.20.0%

B.13.3%

C.7.4%

D.27.4%

2.The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the states newest millionaire. By choosing the six winning numbers on last weeks state lottery, Mr. Ormsby has won the weeks grand prize totaling $1.34 million. The State Lottery Commission has indicated that Mr. Ormsby will receive his prize in 20 annual installments of $67,000 each.

Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.

Required:
1.	If Mr. Ormsby can invest money at a 9% rate of return, what is the present value of his winnings? (Use the appropriate table to determine the discount factor(s).) (Present value) _________x (factor value)_________=(Net present Value) _________