Iron Mountain Inc. has the opportunity to expand its product line but it will have to invest in a new piece of equipment. Plan A is a robotic machine that will cost $8,580,000 and is expected to result in annual net cash inflows of $1,500,000 over nine years, with zero residual value at the end of nine years. A second piece of equipment, called Plan B, will cost $7,980,000 and is expected to generate net cash inflows of $1,000,000 per year for nine years. Estimated residual value for Plan B is $1,075,000. Iron Mountain uses straight-line depreciation and requires an annual rate of return of 6%. Note: At a 6% discount rate, the present value of annuity of $1 for 9 years is 6.802, and the present value of $1 for 9 years is 0.592. Answer the following questions. Each question is worth 1 point.

1. Compute payback period (round answers to one decimal place):

a. Compute payback period for Plan A:

b. Compute payback period for Plan B:

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2. Compute accounting rate of return (Calculate with three decimal places; for example, enter 11.8% as 0.118):

a. Compute accounting rate of return for Plan A:

b. Compute accounting rate of return for Plan B:

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For questions 3 and 4, enter as a positive if positive NPV and negative if negative NPV.

3. Compute net present value for Plan A (round answer to the nearest dollar):

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4. Compute net present value for Plan B (round answer to the nearest dollar):

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5. What is the Internal Rate of Return (IRR) for Plan A? Enter as a % not decimal; e.g., 8.12 not .0812 Hint: The payback period for Plan A will be the factor to use in the PV of an annuity of $1 tables.

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