Vilas Company is considering a capital investment of $203,500 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $15,873 and $55,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.

1. What is the cash payback period?
2. What is the annual rate of return?
3. Using discounted cash flow technique, what is the net present value?