Sulu Inc. has provided the following data to be used in evaluating a proposed investment project (assume that straight line method of depreciation is used, and the same method is used for tax purposes):

Initial investmentP880,000

Annual cash receiptsP660,000

Annual cash expensesP330,000

Useful life8 years

Salvage valueP80,000

Tax rate30%

Discount rate12%

Required:

Compute for the net present value.

The Bynes and Moody partnership is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Amanda Project Debbie Project Penelope Capital investment $140,000 $170,000 $190,000 Annual net income: Year 1 $ 9,000 $12,500 $19,000 9.000 12,000 15.000 9,000 11,000 14,000 9.000 8,000 9,000 9.000 6,000 8.000 Total $45,000 $49,500 $65,000 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 12%. (Assume cash flows occur evenly throughout the year.) Required: 1. Compute the cash payback period for each project. (Round to two decimals.) 2. Compute the annual rate of return for each project. (Round to two decimals.) (Hint: Use average annual net income in your computation, and divide it by the initial capital investment) 3. Compute the net present value for each project. (Round to nearest dollar.) 4. Compute the profitability index for each project. (Round to two decimals.) 5. Compute the internal rate of return for each project. (Round to nearest two decimal places expressed in percentage) 6. Rank the projects on each of the foregoing bases. Which project do you recommend