1.Radiology Associates is considering an investment which will cost $259,000. The investment produces no cash flows for the first year. In the second year, the cash inflow is $58,000. This inflow will increase to $150,000 and then $200,000 for the following two years before ceasing permanently. The firm requires a 14% rate of return and has a required discount payback period of 3 years. Accept or reject this project? Why?

2.You are analyzing the following two mutually exclusive projects and have developed the following information. What is the cross rate?

Project A Project B

Year Cash Flow Cash Flows

0 -$80,300. -$77,900

1 25,500 25,000

2 14,000 13.000

3 47,800 46,000