Jackson Company invests $40,000 in a new piece of equipment. The equipment is expected to yield the following amounts per year for the equipments four-year useful life:

Cash revenues	$70,000
Cash expenses	(45,000)
Depreciation expense (Straight-line)	(10,000)
Net Income	$15,000

Salvage value is zero and the required rate of return is 14%.

Part 1: Calculate the payback period (round your answer to two decimals):

Part 2: Using original investment, compute the accounting rate of return ARR (round your answer to two decimals)

Part 3: Compute the NPV (net present value) of this investment in equipment. Use present values table on next page. Show your work.

Part 4: Based on your answer in Part 3, what do you think: is this a good investment? Why?

Present Value of $1 Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 + 0.909 2 0.980