Yankay Specialty Metals Corporation is reviewing an investment proposal. The initial cost as well as the estimate of the book value of the investment at the end of each year, the net after-tax cash flows for each year, and the net income for each year are presented in the following schedule. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investments life.

Year	Initial Cost and Book Value			Annual Net After-Tax Cash Flows			Annual Net Income
0	$	150,000
1		100,000		$	66,000		$	16,000
2		60,000			58,000			18,000
3		30,000			50,000			20,000
4		10,000			42,000			22,000
5		0			34,000			24,000

Management uses a 14 percent after-tax target rate of return for new investment proposals.

Use Appendix A (http://lectures.mhhe.com/connect/0077632451/Appendix%20A.jpg) for your reference. (Use appropriate factor(s) from the tables provided.)

1.Compute the projects payback period. Assume that the cash flows in years 1 through 5 occur uniformly throughout each year.

Payback period __________ years.

2. Calculate the accounting rate of return on the investment proposal. Base your calculation on the initial cost of the investment. (Round your "Percentage" answer to 1 decimal place (i.e., .1234 should be entered as 12.3).)

Accounting rate of return _______ %

3. Compute the proposals net present value.

Net present value ______