The following data are accumulated by Reynolds Company in evaluating the purchase of $130,200 of equipment, having a four-year useful life:

	Net Income		Net Cash Flow
Year 1	$36,000		$61,000
Year 2	22,000		47,000
Year 3	11,000		35,000
Year 4	(1,000)		24,000

Present Value of $1 at Compound Interest
Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	0.890	0.826	0.797	0.756	0.694
3	0.840	0.751	0.712	0.658	0.579
4	0.792	0.683	0.636	0.572	0.482
5	0.747	0.621	0.567	0.497	0.402
6	0.705	0.564	0.507	0.432	0.335
7	0.665	0.513	0.452	0.376	0.279
8	0.627	0.467	0.404	0.327	0.233
9	0.592	0.424	0.361	0.284	0.194
10	0.558	0.386	0.322	0.247	0.162

a. Assuming that the desired rate of return is 20%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar.

- Present value of net cash flow

- Less amount to be invested

- Net present value

2. Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $162,000 and each with an eight-year life and expected total net cash flows of $216,000. Location 1 is expected to provide equal annual net cash flows of $27,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1	$58,000
Year 2	42,000
Year 3	28,000
Year 4	21,000
Year 5	13,000
Year 6	26,000
Year 7	18,000
Year 8	10,000

Determine the cash payback period for both location proposals.

How many years for location 1?

How many years for location 2?

3. Rapid Delivery, Inc., is considering the purchase of an additional delivery vehicle for $40,000 on January 1, 2016. The truck is expected to have a five-year life with an expected residual value of $5,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $55,000 per year for each of the next five years. A driver will cost $37,000 in 2016, with an expected annual salary increase of $3,000 for each year thereafter. The annual operating costs for the truck are estimated to be $2,000 per year.

Present Value of $1 at Compound Interest
Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	0.890	0.826	0.797	0.756	0.694
3	0.840	0.751	0.712	0.658	0.579
4	0.792	0.683	0.636	0.572	0.482
5	0.747	0.621	0.567	0.497	0.402
6	0.705	0.564	0.507	0.432	0.335
7	0.665	0.513	0.452	0.376	0.279
8	0.627	0.467	0.404	0.327	0.233
9	0.592	0.424	0.361	0.284	0.194
10	0.558	0.386	0.322	0.247	0.162

a. Determine the expected annual net cash flows from the delivery truck investment for 2016-2020.

b. Calculate the net present value of the investment, assuming that the minimum desired rate of return is 15%. Use the table of the present value of $1 presented above. When required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.

- Present value of annual net cash flow

- Less Investment

-Net present value