A small aviation school is evaluating the merits of two independent projects $-$ a full$-$motion flight simulator, and an instrument device offering state$-$of$-$the$-$art nighttime flight guidance. Both projects are expected to have $5-$year life cycles. The flight simulator has an initial cost of $$150,000,$ and it is expected to generate net revenues of $$40,000$ per year for each of the next $5$ years. The instrument device costs $$85,000$ today, and it has expected net revenues for the next $5$ years of $$20,000$ per year. Within its financial evaluations, the aviation school uses a discount rate of $10\%$ for all projects.

Question $1$

Calculate the Payback Period for the flight simulator.

Question $1$ options:

$3\mathrm{.}25$ years

$3\mathrm{.}75$ years

$4\mathrm{.}25$ years

$4\mathrm{.}75$ years

None of the above.

Question $2$

Calculate the Payback Period for the instrument device.

Question $2$ options:

$4\mathrm{.}25$ years

$4\mathrm{.}75$ years

$5\mathrm{.}25$ years

$5\mathrm{.}75$ years

None of the above.

Question $3$

Calculate the Discounted Payback Period for the flight simulator.

Question $3$ options:

$4\mathrm{.}04$ years

$4\mathrm{.}58$ years

$4\mathrm{.}85$ years

$4\mathrm{.}93$ years

None of the above.

Question $4$

Calculate the Discounted Payback Period for the nighttime instrument device.

Question $4$ options:

$4\mathrm{.}74$ years

$5\mathrm{.}46$ years

$5\mathrm{.}74$ years

$5\mathrm{.}81$ years

Beyond $5$ years $-$ No Payback

Question $5$

Calculate the NPV for the flight simulator project.

Question $5$ options:

$($$$32,961)$

$$1,631$

$$50,000$

$$151,631$

None of the above.

Question $6$

Calculate the NPV for the nighttime instrument project.

Question $6$ options:

$($$$26,480)$

$($$$9,184)$

$$15,000$

$$75,816$

Question $7$

Based upon the NPV results, which project$($s$)$ should be accepted for investment?

Question $7$ options:

The flight simulator project should be accepted.

The nighttime instrument device should be accepted.

Both projects should be accepted.

Neither project should be accepted.

Question $8$

Calculate the IRR for the flight simulator project.

Question $8$ options:

$0\mathrm{.}4\%$

$10\mathrm{.}4\%$

$15\mathrm{.}3\%$

None of the above.

Question $9$

Calculate the IRR for the nighttime instrument project.

Question $9$ options:

$-3\mathrm{.}9\%$

$5\mathrm{.}7\%$

$10\mathrm{.}8\%$

None of the above.

Question $10$

When evaluating a project using the Internal Rate of Return $($IRR$)$ method, what is the standard decision$-$making rule?

Question $10$ options:

Accept any project with a positive IRR

Accept any project with an IRR that is greater than its cost of capital

Accept any project with an IRR that is less than its expected life

Accept any project with an IRR greater than $10\%$