Gum Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Gum pay over the life of the loan?

The IRR method assumes that cash flows are reinvested at ________.

a. the internal rate of return

b. the company's discount rate

c. the lower of the company's discount rate or internal rate of return

d. an average of the internal rate of return and the discount rate

Lawson Co. is considering purchasing a new machine which will cost $650,000, but which will decrease costs each year by $100,000. The useful life of the machine is 10 years. What is the cash payback period?