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	$	195,000
1		130,000		$	82,000		$	17,000
2		78,000			71,000			19,000
3		39,000			60,000			21,000
4		13,000			49,000			23,000
5		0			38,000			25,000

Management uses a 16 percent after-tax target rate of return for new investment proposals.

Use Appendix A 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. (Round your answer to 2 decimal places.)

Payback period

years

Calculate the accounting rate of return on the investment proposal. Base your calculation on the initial cost of the investment.

Accounting rate of return

%

Compute the proposals net present value.

Net present value