Q1 ASM International, an Australian steel company, claims that a savings of 30% of the cost of stainless steel threaded bar can be achieved by replacing machined threads with precision weld depositions. A U.S. manufacturer of rock bolts and grout-in fittings plans to purchase the equipment. A mechanical engineer with the company has prepared the following cash flow estimates. Determine the expected rate of return per year. include a cash flow diagram.

Quarter	Cost, $	Savings, $
0	450,000	-
1	50,000	10,000
2	40,000	20,000
3	30,000	30,000
4	20,000	40,000
5	10,000	50,000
612	-	80,000

Q2 The incremental cash flow between alternatives Z1 and Z2 is shown below (Z2 has the higher initial cost). Use an AW-based rate of return equation to determine the incremental rate of return and which alternative should be selected, if the MARR is 17% per year. Let k =1 to 10 from year 1 through 10. include a cash flow diagram.

	Incremental
Year	Cash Flow, $(Z2 Z1)
0	40,000
110	9000 - 500,000