8% Yappy Company is considering a capital investment of $320.000 in additional equipment. The new equipment is expected to have a useful life of 8 vears with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $22.000 and $62.000, respectively. Yappy requires a 10% return on all new investments. Present Value of an Annuity of 1 Period 9% 10% 11% 12% 15% 5.747 5.535 5.335 5.146 4.968 4.487 Instructions (a) Compute each of the following: 1. Cash payback period. 2. Net present value. 3. Profitability index. 4 Internal rate of return. 5. Annual rate of return. (b) Indicate whether the investment should be accepted or rejected. Solution and calculations: (a) 1. Cash payback period 2. Net present value 3. Profitability index: 4. Internal rate of return: 5. Annual rate of return: (b)