Initial investment	$ 144,000
Salvage value	$ 4,000
Estimated useful life	4	years
Annual net cash flows	$ 46,100
Annual depreciation expense	$ 35,000

The annual average investment amount used to calculate the accounting rate of return is:

Multiple Choice

• $72,000

• $70,000

• $37,000

• $74,000

• $48,950

Tressor Company is considering a 5-year project. The company plans to invest $90,000 now, and it forecasts cash flows for each year of $27,000. The company requires that investments yield a discount rate of at least 14%. Selected factors for a present value of an annuity of $1 for five years are shown below:

Interest rate	Present value of an annuity of $1 factor for year 5
10%	3.7908
12%	3.6048
14%	3.4331

Calculate the internal rate of return to determine whether it should accept this project.

Multiple Choice

• The project should be accepted because it will earn more than 14%.

• The project should be accepted because it will earn more than 10%.

• The project will earn more than 12% but less than 14%. At a hurdle rate of 14%, the project should be rejected.

• The project should be rejected because it will earn less than 14%.

• The project should be rejected because it will not earn exactly 14%.

Vextra Corporation is considering the purchase of new equipment costing $35,000. The projected annual cash inflow is $11,000, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Vextra requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows:

Periods	12%
1	0.8929
2	1.6901
3	2.4018
4	3.0373

Compute the net present value of this investment (rounded to the nearest whole dollar).

Multiple Choice

• $(33,410).

• $(3,100).

• $35,000.

• $3,410.

• $(1,590).