Delley Inc. is considering the acquisition of equipment that costs $340,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipment are:
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Incremental Net
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Cash Flows
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Year 1
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$94,000
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Year 2
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$133,000
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Year 3
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$96,000
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|
Year 4
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$116,000
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Year 5
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$115,000
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Year 6
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$87,000
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1. If the discount rate is 17%, the net present value of the investment is closest to:
A) $45,811
B) $385,811
C) $301,000
D) $117,341
2. The payback period of this investment, rounded off to the nearest tenth of a year, is closest to:
A) 3.9 years
B) 3.6 years
C) 3.1 years
D) 5.0 years