Ferrent is debating whether to invest in new equipment to manufacture industrial distilling vats. The new equipment would cost $$900,000$ and would have an estimated four$-$year life and no salvage value. The estimated annual operating results with the new equipment are as follows. $($Use Exhibit $26-4.)$All revenue from the sale of industrial distilling vats and all expenses $($except depreciation$)$ will be received or paid in cash in the same period as recognized for accounting purposes.

Required:

Revenue from sales of industrial distilling vats: $\_\_\_\_\_\_\_\_$ $$956,000$

Expenses Other than depreceation:

$$675,000\_\_\_\_\_\_\_$

Depreciation $($straight$-$line basis$)$

$225,000900,000$

Increase in net income from industrial distilling vats: $\_\_\_\_\_\_\_$

$\backslash$table$[[$Revenue from sales of industrial distilling vats,$$956,000,],[$Expenses other than depreciation,$$675,000,],[$Depreciation $($straight$-$line basis$),225,000,900,000],[$Increase in net income from industrial distilling vats,,$$56,000$$$56,000$

a$.$ Compute the annual cash flows for Ferrent's investment in the new equipment.

b$.$ Compute the payback period for Ferrent's investment in the new equipment.

Note: Round your answer to $1$ decimal place.

c$.$ Compute the return on average investment for Ferrent's investment in the new equipment.

Note: Round your percentage answer to $1$ decimal place $($i$.$e$.,12\mathrm{.}34$ to be entered as $12\mathrm{.}3).$

d$.$ Compute the total present value of the expected future annual cash inflows, discounted at an annual rate of $10$ percent for Ferrent's investment in the new equipment.

Note: Round your $"$PV factor" to $3$ decimal places and final answer to the nearest dollar amount.

e$.$ Compute the net present value of the proposed investment discounted at $10$ percent for Ferrent's investment in the new equipment.

Note: Enter negative value with a minus sign. Round your $"$PV factor" to $3$ decimal places and final answer to the nearest dollar amount.

$\backslash$table$[[$a$.$ Annual cash flows,,$],[$b$.$ Payback period,,years$],[$c$.$ Return on average investment,,$\%$