Hearne could purchase 25 new delivery trucks at a cost of $164,400 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,300. Purchasing the fleet would allow Hearne to expand its customer territory, resulting in $240,000 of additional net income per year.

Required:

1.Determine each project's accounting rate of return.

2.Determine each project's payback period.

3.Using a discount rate of 10 percent, calculate the net present value of each project.

4.Determine the profitability index of each project and prioritize the projects for Hearne.