Hunt Inc. intends to invest in one of two competing types of computer-aided manufacturing equipment: CAM X and CAM Y. Both CAM X and CAM Y models have a project life of 10 years. The purchase price of the CAM X model is $3,600,000, and it has a net annual after-tax cash inflow of $900,000. The CAM Y model is more expensive, selling for $4,200,000, but it will produce a net annual after-tax cash inflow of $1,050,000. The cost of capital for the company is 10%.

Required:

Calculate the NPV for each project. Round present value calculations and your final answers to the nearest dollar.

CAM X: $_____

CAM Y: $_____

Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.

a.Colby Hepworth has just invested $400,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment.

b.Kylie Sorensen has just invested $1,400,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $700,000, $420,000, and $280,000.

c.Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year.

d.Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years.

Required:

What is the payback period for Colby? Round your answer to two decimal places.

_____years

What is the payback period for Kylie? Round your answer to one decimal place.

_____years

How much did Carsen invest in the project?

$_____

How much cash does Rahn receive each year?

$_____ per year