2.

Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment Annual net cash flows Life of the equipment Salvage value Discount rate $ 450,000 $ 90,000 10 years $ 0 78 The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment would be: Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment Annual cash inflows Salvage value of equipment Life of the investment Required rate of return $32,500 $ 7,000 $ 0 15 years 10% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided. The internal rate of return of the investment is closest to: Vandezande Inc. is considering the acquisition of a new machine that costs $429,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.): Year 1 Year 2 Year 3 Year 4 Year 5 Incremental Net Operating Income $70,000 $ 76,000 $87,000 $50,000 $92,000 Incremental Net Cash Flows $152,000 $ 155,000 $ 165,000 $152,000 $154,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period of this investment is closest to