Newman Automobiles Manufacturing is considering two alternative investment proposals with the following data:

	Proposal X	Proposal Y
Investment	$10,000,000	$500,000
Useful life	5 years	5 years
Estimated annual net cash inflows for 5 years	$2,000,000	$95,000
Residual value	$50,000	$20,000
Depreciation method	Straight-line	Straight-line
Required rate of return	12%	10%

Calculate the payback period for Proposal X.

5 years

4 years

8 years

10 years

Paramount Company is considering purchasing new equipment costing $700,000. Company's management has estimated that the equipment will generate cash flows as follows:

Year 1	$200,000
2	200,000
3	250,000
4	250,000
5	150,000

The company's required rate of return is 10%. Using the factors in the table below, calculate the present value of the cash inflows. Present value of $1:

	6%	7%	8%	9%	10%
1	0.943	0.935	0.926	0.917	0.909
2	0.89	0.873	0.857	0.842	0.826
3	0.84	0.816	0.794	0.772	0.751
4	0.792	0.763	0.735	0.708	0.683
5	0.747	0.713	0.681	0.65	0.621

		$765,000
		$768,921
		$798,650
		$780,000