1.If the cost of capital is 8%, will a company that that would pay $100,000 investment in equipment in year 1, and then receives $21,000 per year each of the next eight years (but no salvage value) make the investment?

a. Yes

b. No

2. What would the net cash flows (not discounted) for a company that makes a $100,000 investment in year 1, and then receives $21,000 per year each of the next eight years?

a. $100,000

b. $68,000

c. $268,000

d. $168,000