Dwight Donovan, the president of Rooney Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Rooney Enterprises' desired rate of return is 8 percent. Required

1. Compute the net present value of each project. Which project should be adopted based on the net present value approach? Round to 2 decimal points.

2. Compute the approximate internal rate of return of each project. Which one should be adopted based on the internal rate of return approach? Round to 6 decimal points

3. Compare the net and internal rate of return approach. Which method is better in the given situation and why?

• Analyze the results of the net present value calculations and the significance of these results, supported with examples.
• Determine which project should be adopted based on the net present value approach and provide a rationale for your decision.
• Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.
• Determine which project should be adopted based on the internal rate of return approach and provide a rationale for your decision.
• Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.
• Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises.