Doctors Hanson, Dominick, and Borchard are radiologists living in Fargo, North Dakota. They realize that many of the state's small rural hospitals cannot afford to purchase their own magnetic resonance imaging devices (MRIS). Thus, the doctors are considering whether it would be feasible for them to form a corporation and invest in their own mobile MRI unit. The unit would be transported on a scheduled basis to more than 100 rural hospitals using an 18-wheel tractor-trailer. The cost of a tractor-trailer equipped with MRI equipment is approximately $1,250,000. The estimated life of the investment is eight years, after which time its salvage value is expected to be no more than $100,000. The doctors anticipate that the investment will generate incremental revenue of $800,000 per year. Incremental expenses (which include depreciation, insurance, fuel, maintenance, their salaries, and income taxes) will average $700,000 per year. Net incremental cash flows will be reinvested back into the corporation. The only difference between incremental cash flows and incremental income is attributable to depreciation expense. The doctors require a minimum return on their investment of 12 percent Required: a. Compute the payback period of the mobile MRI proposal. (Round your answer to 2 decimal places.) Payback period years b. Compute the return on average investment of the proposal. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be considered as 12.34.)) Return on average % investment Exhibits 26-3 and 26-4. (Round "PV Factor" to 3 decimal places, c. Compute the net present value of the proposal using the tables intermediate and final answers to the nea rest dollar amount.) Net present value