8. A new machine costing $750,000 will yield cash savings of $250,000 each year for four years. In addition, it is anticipated that the new machine will increase productivity and that the company will experience an increase in contribution margin as a result. What annual dollar inflow from increased contribution margin would the company have to experience to make the machine an acceptable investment if the minimum desired rate of return is 18%?

a. $28,810.41 b. $62,500.00 c. $77,500.00 d. $39,687.14

9. The payback period of an investment is useful in determining its:

a. net present value.

b. overall profitability.

c. acceptability in terms of the length of time until the invested funds are free for use elsewhere.

10. A project will require an investment of $100,000. Anticipated cash flows are: $50,000 in year 1; $40,000 in year 2; and $20,000 in years 3 - 5. The payback period for this investment is:

a. 3 years

b. 2 years

c. 3 years

d. 2 years