All scenarios are independent of all other scenarios. Assume that all cash flows are after-tax cash flows. Kambry Day is considering investing in one of the following two projects. Either project will require an investment of $20,000. The expected cash flows for the two projects follow. Assume that each project is depreciable. Year Project A $ 6,000 8,000 10,000 10,000 10,000 Project B 3 4 5 $ 6,000 8,000 10,000 3,000 3,000 2. David Booth is interested in investing in some tools and equipment so that he can do independently drywalling. The cost of the tools and equipment is $30,000. He estimates that the return from owning his own equipment will be $9,000 per year. The tools and equipment will last for six years. 3. Patsy Folson is evaluating what appears to be an attractive opportunity. She is currently the owner ofa small manufacturing company and has the opportunity to acquire another small company's equipment that would provide production of a part currently purchased externally. She estimates that the savings from internal production be $75,000 per year. She estimates that the equipment l last 10 years. The owner is asking $400,000 for the equipment. Her company's cost of capital is 8 percent. Required: What is the payback period for each of Kambry Day's projects? If rapid payback is important, which project should be chosen? Which would you choose? Which of Kambry's projects should be chosen based on the Accounting Rate of Return (ARR)? Assuming a required rate of returm of 8 percent for David Booth, calculate the NPV of the investment. Should David invest7 Calculate the IRR for Patsy Folson's project. Should Patsy acquire the equipment? a. b. c. d