4. Sunland, Inc. is considering purchasing equipment costing $30000 with a 6-year useful life. The equipment will provide annual cost savings of $9000 and will be depreciated straight-line over its useful life with no salvage value. Sunland requires a 10% rate of return.

	Present Value of an Annuity of 1
Period	8%	9%	10%	11%	12%	15%
6	4.623	4.486	4.355	4.231	4.111	3.784

What is the approximate net present value of this investment?

$9195

$10374

$24000

$8078

5.

Monty, Inc. is considering purchasing equipment costing $50000 with a 6-year useful life. The equipment will provide annual cost savings of $12162 and will be depreciated straight-line over its useful life with no salvage value. Monty requires a 10% rate of return.

	Present Value of an Annuity of 1
Period	8%	9%	10%	11%	12%	15%
6	4.623	4.486	4.355	4.231	4.111	3.784

What is the approximate internal rate of return for this investment?

10%

9%

11%

12%

7.

	Present Value of an Annuity of 1
Periods	8%	9%	10%
1	.926	.917	.909
2	1.783	1.759	1.736
3	2.577	2.531	2.487

A company has a minimum required rate of return of 8%. It is considering investing in a project that costs $105116 and is expected to generate cash inflows of $42000 each year for three years. The approximate internal rate of return on this project is

11%.

less than the required 8%.

9%.

10%.

25.

If Verizon customers are slow to adopt 4G wireless services, its investment in the new network will

experience no effect on the payback period but the net present value will be negative.

have a shorter payback period and most likely a negative net present value as well.

have a longer payback period but quite possibly a positive net present value.

have a shorter payback period but quite possibly a positive net present value.