1.You're trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $20.6 million, which will be depreciated straight-line to zero over its four-year life.

If the plant has projected net income of $1,915,000, $2,195,000, $2,134,000, and $1,376,000 over these four years, what is the project's average accounting return (AAR)?(Do not round intermediate calculations and enter your answer as a percent rounded to2 decimal places, e.g., 32.16.)

2.A project that will provde annual cash flows of $2,350 for nine years costs $9,700 today.

a.At a required return of 12 percent, what is the NPV of the project?(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b.At a required return of 28 percent, what is the NPV of the project?(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

c.At what discount rate would you be indifferent between accepting the project and rejecting it?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

3.Stenson, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available.

Year. Cash Flow A Cash Flow B

0. -$49,000 -$94,000

1 19,000 21,000

2 25,400 26,000

3 21,000 33,000

4 7,000 246,000

What is the payback period for project A and project B?(Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

4.Consider the following cash flows:

Year. Cash Flow

0 $28,600

1 15,100

2. 13,800

3. 10,200

a.What is the profitability index for the cash flows if the relevant discount rate is 11 percent?(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

b.What is the profitability index if the discount rate is 16 percent?(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

c.What is the profitability index if the discount rate is 23 percent?(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

5.Doak Corp. is evaluating a project with the following cash flows:

Year. Cash Flow

0 -$15,400

1 6,500

2 7,700

3 7,300

4 6,100

5 -3,500

The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project using all three methods.(discounting approach, reinvestment approach, and combination approach)(Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)