Problems 1 through 4 refer to the following information:

YEAR Project A

0 ($29,000)

1 $22,000

2 $18,000

3 $9,000

4 ($2,000)

5 $9,000

1. Calculate discounted payback for this project assuming an interest rate of 10%.

2. Calculate the equivalent annual annuity (EAA) of this project assuming an interest rate of 10%.

3. Calculate the modified internal rate of return (MIRR) of this project assuming an interest rate of 10%.

4. Company X expects to sell 10,000 units of a new project at an average price of $12 each for each of the next four years. Costs-of-goods sold (variable costs) are expected to be 40% of sales in the first year, 45% of sales in the second and third years, and then 50% for the fourth year. Fixed costs will be $15,000 per year. The machine required to make the new products will cost $100,000 to buy and will be depreciated using the MACRS 3-year class (0.3333; 0.4445; 0.1481; 0.0741). The machine will be sold at the end of the fourth year for $40,000. The tax rate is 40%. Working capital requirements are $20,000. The companys cost of capital is 10%. What is the net present value (NPV) of this project?