2. Which of the following is considered to be a redeeming feature of average accounting return analysis?

Select one:

a. It is relatively easy to calculate.

b. It incorporates time value of money.

c. Estimation of the appropriate cutoff rate is straightforward and easy.

d. Calculation relies on book values and not market values or cash flows.

e. Calculation relies on net income and not cash flows or asset values.

3. Bill plans to open a do-it-yourself dog bathing center in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica.

Assume the required return is 17%. What is the project's IRR? Should it be accepted?

Select one:

a. 16.3%; yes

b. 12.2%; yes

c. 17.0%; indifferent

d. 12.2%; no

e. 16.3%; no

Please answer all questions with calculating process.(prefer to use formula not excel)