Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return

Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirement below.

Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $800,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:

Year	Cash Revenues	Cash Expenses
1	$1,500,000	$1,300,000
2	1,500,000	1,300,000
3	1,500,000	1,300,000
4	1,500,000	1,300,000
5	1,500,000	1,300,000

Required:

Compute the investment's Net Present Value, assuming a required rate of return of 5 percent.

a.65,896

b.75,896

c.47,896

d.65,876

e.65,881