Vision Company has the opportunity to invest in the following project:

Cost $134,000

Annual Net Cash Flows $32,000

Useful Life 8 Years

Depreciation Method Straight Line

a) If Vision Company uses the payback method to evaluate this project and they require that all projects must payback within 60% of their useful lives, is this project acceptable? Show all of your work including the required and actual payback periods of this project!

b) Assume again that this project has a salvage value of $1,200 and DRB Incorporated used the internal rate of return method to evaluate their projects. Also assume they require that all projects must have a minimum rate of return of 18%. What is the IRR % return on this project? Is this project acceptable? (solve to the closest whole %)

c) Assume that this project has a salvage value of $38,000 (different from assumed in (b) above) and Vision Company uses the simple rate of return method of evaluating projects. Further assume that Vision only accepts projects that return at least 16%. Is this project acceptable? Show all of your work including the simple rate of return of this project!