LuangCompany is considering the purchase of a new machine. Its invoice price is $122,000, freight charges are estimated to be $3,000, and installation costs are expected to be $5,000. Salvage value of the new machine is expected to be zero after a useful life of4years. Existing equipment could be retained and used for an additional4years if the new machine is not purchased. At that time, the salvage value of the equipment would be zero. If the new machine is purchased now, the existing machine would be scrapped.Luang's accountant, Lisa Hsung, has accumulated the following data regarding annual sales and expenses with and without the new machine.

1.Without the new machine,Luangcan sell10,000units of product annually at a per unit selling price of $100. If the new unit is purchased, the number of units produced and sold would increase by25%, and the selling price would remain the same.2.The new machine is faster than the old machine, and it is more efficient in its usage of materials. With the old machine the gross profit rate will be28.5% of sales, whereas the rate will be30% of sales with the new machine. (Note:These gross profit rates do not include depreciation on the machines. For purposes of determining net income, treat depreciation expense as a separate line item.)

3.Annual selling expenses are $160,000with the current equipment. Because the new equipment would produce a greater number of units to be sold, annual selling expenses are expected to increase by10% if it is purchased.4.Annual administrative expenses are expected to be $100,000with the old machine, and $112,000with the new machine.5.The current book value of the existing machine is $40,000.Luanguses straight-line depreciation.6.Luang's management has a required rate of return of 15% on its investment and a cash payback period of no more than 3 years.

Answer the following questions. (Ignore income tax effects.)

a- Calculate the annual rate of return for the new machine.(Round answer to 1 decimal places, e.g. 15.5%.)

b- compute the cahs payback period for the new machine (Round answer to 2 decimal places, e.g. 15.25%.)

c- compute the net present value of the new machine