The management of Iroquois National Bank is considering an investment in automatic teller machines. The machines would cost $142,600 and have a useful life of seven years. The banks controller has estimated that the automatic teller machines will save the bank $31,000 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value.

Required:

1.	Compute the payback period for the proposed investment. (Round your answer to 1 decimal place.)
	Payback period = _____ Years

2.	Compute the net present value of the proposed investment assuming an after-tax hurdle rate of: (a) 10 percent, (b) 12 percent, and (c) 14 percent. (Negative amounts should be indicated by a minus sign. Round your final answers to the nearest dollar amount.) Net Present Value
	a. 10 percent b. 12 percent c. 14 percent

3.

Which of the following statements are true? (Select all that apply.)

The net-present-value method is preferable to the payback method. The payback method is preferable to the net-present-value method. The cut-off value for the payback period has nothing to do with the bank's hurdle rate. If management uses the payback method, the investment will be approved only if the required payback period is ~a(7)~ years or more. The cut-off value for the payback period is very much dependent on the bank's hurdle rate. The cut-off value for the payback period has nothing to do with the bank's hurdle rate.