Consider the following mutually exclusive pieces of equipment that perform the same task. The two alternatives available provide the following set of after-tax net cash flows: Year Cash Flow(A) Cash Flow(B) 0 -$30,000 -$30,000 1 13,000 6,500 2 13,000 6,500 3 13,000 6,500 4 6,500 5 6,500 6 6,500 7 6,500 8 6,500 9 6,500

Equipment A has an expected life of three years, whereas equipment B has an expected life of nine years. Assume a required rate of return of 14 percent.

a. Calculate each equipments payback period. (Rounded to two decimal places)

b. Calculate each equipments discounted payback period. (Rounded to 2 decimal places)

c. Calculate each equipments Net Present Value (NPV). (Rounded to 2 decimal places)

d. Calculate each equipments internal rate of return. (Rounded to 2 decimal places)

e. How would you rank the investments based on the NPV criterion?

f. How would you rank the investments based on the IRR criterion?