Dr. Whitley Avard, a plastic surgeon, had just returned from a conference in which she learned of a new surgical procedure for removing wrinkles around eyes, reducing the time to perform the normal procedure by 50%. Given her patient-load pressures, Dr. Avard is excited to try out the new technique. By decreasing the time spent on eye treatments or procedures, she can increase her total revenues by performing more services within a work period. In order to implement the new procedure, special equipment costing $74,000 is needed. The equipment has an expected life of 4 years, with a salvage value of $6,000. Dr. Avard estimates that her cash revenues will increase by the following amounts:

Year	Revenue Increases
1	$19,800
2	27,000
3	32,400
4	32,400

She also expects additional cash expenses amounting to $3,000 per year. The cost of capital is 12%. Assume that there are no income taxes.

Required:

1. Compute the payback period for the new equipment. Round your answer to two decimal places. years

2. Compute the ARR. Round your answer to two decimal places. 2 %

3. CONCEPTUAL CONNECTION: Compute the NPV and IRR for the project. Use 14% as your first guess for IRR.

NPV	$
IRR		%