Q1 Wally's Plumbing provides commercial plumbing services to large factories.The company is looking at purchasing some new equipment that will have a useful life of 4 years.Information in the investment is as follows:

Initial InvestmentAsset$90,000Changes in annual cash flowsCash receipts$60,000Cash expenditures$35,000Salvage value equipment at end of 4 years$10,000

In what range is the internal rate of return?

Select one:

a.7% and 8%

b.8% and 9%

c.9% and 10%

d.10% and 11%

Q2 Green Tea Corporation recently purchased a new tea processor for $320,900.The existing equipment had a remaining life of 10 years.The additional cash flows will be $50,000 per year from having the new machine.What is the internal rate of return?

Select one:

a.10%

b.11%

c.9%

d.12%

Q3 The following information was provided related to three machines that London Press is considering investing in:

Machine AMachine BMachine CInitial Investment$200,000$250,000$310,000Annual cash inflows$50,000$65,000$80,000Useful lives6 years5 years5 years

The cost of capital for the company is 12%.Which of the following decisions should the company make?

Select one:

a.Purchase Machine C

b.Do not purchase any machines

c.Purchase Machine B

d.Purchase any of the three machines

e.Purchase Machine A