Nelson, Inc. purchased a $500,000 machine for their manufacturing plant. The machine is expected to have 10 years useful life with no salvage value. The company has been paying 30% for federal, state, and local income taxes. Nelson uses straight line depreciation. Nelson uses a 12% discount rate in evaluating capital investments. The investment is subject to taxes and the pretax operating cash inflows are as follows:

Year Pretax Cash Inflows

1 $50,000

2 $80,000

3 $120,000

4 $200,000

5 $240,000

6 $300,000

7 $270,000

8 $240,000

9 $120,000

10 $40,000

a) What is the basic payback period for the proposed investment, rounded to the nearest tenth of a year? Present computations.

b) What is the net present value for the proposed investment, rounded to the nearest thousand dollars? Present computations.

c) What is the present value payback period, rounded to the nearest tenth of a year? Present computations.

d) What is the internal rate of return, rounded to the nearest whole percentage?

e) What is the modified internal rate of return, rounded to the nearest tenth of a percent? Present computations.