1. Somerville Corporation is considering investing in specialized equipment costing $695,000. The equipment has a useful life of 5 years and a residual value of $52,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:

   Year 1	$210,000
   Year 2	$180,000
   Year 3	$167,000
   Year 4	$69,000
   Year 5	$87,000
   	$713,000

   Somerville Corporation's required rate of return is 16%. The net present value of the investment is closest to: Present Value of $1

   Periods	10%	12%	14%	16%
   1	0.909	0.893	0.877	0.862
   2	0.826	0.797	0.769	0.743
   3	0.751	0.712	0.675	0.641
   4	0.683	0.636	0.592	0.552
   5	0.621	0.567	0.519	0.476

   Present Value of Annuity of $1

   Periods	10%	12%	14%	16%
   1	0.909	0.893	0.877	0.862
   2	1.736	1.690	1.647	1.605
   3	2.487	2.402	2.322	2.246
   4	3.170	3.037	2.914	2.798
   5	3.791	3.605	3.433	3.274

   		$18,000 positive.
   		$168,941 positive.
   		$168,941 negative.
   		$8568 negative.