Ishpreet Hot Springs Company has an old machine that is fully depreciated but has a current salvage value of $8,000. The company wants to purchase a new machine that would cost $60,000 and have a five-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are:

Increased revenues		$63,000
Increased expenses:
Salary of additional operator	$20,000
Supplies	9,000
Depreciation	9,000
Maintenance	4,000	42,000
Increased net income		$21,000

Required: (answer to 2 decimal points)

1. What is the payback period for the new equipment? (5Marks)
2. What is the simple rate of return on the new equipment? (5 marks)
4. You have just learned that you are a beneficiary in the will of your late Aunt Ishpreet. The executrix of her estate has given you three options as to how you may receive your inheritance:
5. 1. You may receive $57,000 immediately.
   2. You may receive $95,000 at the end of six years.
   3. You may receive $12,000 at the end of each year for six years (a total of $72,000).

If you can invest money at an 8% return, which option would you prefer? (show your detailed calculation)