Pick the CORRECT answer, show work 29. Darth Company is considering the purchase of new heavy construction equipment that will cost $2,000,000 and have a life of 8 years with no expected salvage value. The expected cash flows associated with the project are as follows:

Year Cash Revenues Cash Expenses & Depreciation 1 $2,400,000 $1,900,000 2 $2,400,000 $1,900,000 3 $2,400,000 $1,900,000 4 $2,400,000$1,900,000 5 $2,400,000 $1,900,000 6 $2,400,000 $1,900,000 7 $2,400,000 $1,900,000 8$2,400,000 $1,900,000 What is the average annual income for this project? a. $2,400,000 b. $1,900,000 c. $500,000 d. $62,500 e. $300,000 30. What is the accounting rate of return for the project? a. 25% b. 3.125% c. 400% d. 83.33% e. 120% 31. Present value of $1 Periods 4% 6% 8%10%12%14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 0.925 0.890 0.857 0.826 0.797 0.769 3 0.889 0.840 0.794 0.751 0.712 0.675 4 0.855 0.792 0.735 0.683 0.636 0.592 5 0.822 0.747 0.681 0.621 0.567 0.519 6 0.790 0.705 0.630 0.564 0.507 0.456 7 0.760 0.665 0.583 0.513 0.452 0.400 8 0.731 0.627 0.540 0.467 0.404 0.351 9 0.703 0.592 0.500 0.424 0.361 0.308 10 0.676 0.558 0.463 0.386 0.322 0.270 Present value of an Annuity of $1 Periods 4% 6% 8% 10% 12% 14% 10.962 0.943 0.926 0.909 0.893 0.877 21.886 1.833 1.783 1.736 1.690 1.647 3 2.775 2.673 2.577 2.487 2.402 2.322 4 3.630 3.465 3.312 3.170 3.037 2.914 5 4.452 4.212 3.993 3.791 3.605 3.433 6 5.242 4.917 4.623 4.355 4.111 3.889 7 6.002 5.582 5.206 4.868 4.564 4.288 8 6.733 6.210 5.747 5.335 4.968 4.639 9 7.435 6.802 6.247 5.759 5.328 4.946 108.111 7.360 6.710 6.145 5.650 5.216 Morgan Clinical Practice is considering an investment in new imaging equipment that will cost $400,000. The equipment is expected to yield cash inflows of $80,000 per year for a six year period. Morgan set a required rate of return at 10%. What is the net present value of the investment? ( Note: there may be rounding error depending on the table you use to compute your answer. Choose the answer closest to the one you calculate.) a. $51,600 b. ($51,600) c. $348,400 d. ($348,600) e. $451,600 32. Elizabeth Myers invested in a project that required an initial amount of $1,560, and returned one cash inflow of $12,000 at the end of the 18th year. A partial table of the present value of an annuity of $1 in arrears is as follows: Year 2% 4% 6% 8% 10% 12% 14% 16% 18 0.700 0.494 0.350 0.250 0.180 0.130 0.095 0.069 What is the internal rate of return for this investment? a. 8% b. 10% c. 12% d. 14% e. 16% 33. The best person/group in a firm to perform a post audit of a capital investment is usually: a. the manager of that investment. b. the CEO. c. the board of directors. d. the internal audit staff. e. an external auditor.