The following relates to a proposed equipment purchase:

Cost	$	156,000
Salvage value	$	4,500
Estimated useful life		4	years
Annual net cash flows	$	52,100
Depreciation method	Straight-line

Ignoring income taxes, the annual net income amount used to calculate the accounting rate of return is:

Multiple Choice

• $52,100

• $14,225

• $15,350

• $89,975

• $50,975

  Poe Company is considering the purchase of new equipment costing $81,000. The projected net cash flows are $36,000 for the first two years and $31,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine.

  Periods	Present Value of $1 at 10%			Present Value of an Annuity of $1 at 10%
  1		0.9091			0.9091
  2		0.8264			1.7355
  3		0.7513			2.4869
  4		0.6830			3.1699

  Multiple Choice

• $(17,901).

• $(6,707).

• $17,901.

• $6,707.

• $25,944.