Q1.Dunay Corporation is considering investing $790,000 in a project. The life of the project would be 6 years. The project would require additional working capital of $29,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $168,000. The salvage value of the assets used in the project would be $39,000. The company uses a discount rate of 13%. (Ignore income taxes.)
Required: 
Compute the net present value of the project.(Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the “$” sign in your response.) 
Q2.Tranter, Inc., is considering a project that would have a nineyear life and would require a $3,300,000 investment in equipment. At the end of nine years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: (Ignore income taxes.) 





Sales 


$ 
2,700,000 
Variable expenses 



1,700,000 





Contribution margin 



1,000,000 
Fixed expenses: 




Fixed outofpocket cash expenses 
$ 
400,000 


Depreciation 

260,000 

660,000 





Net operating income 


$ 
340,000 






Click here to viewExhibit 13B2, to determine the appropriate discount factor(s) using tables. 
All of the above items, except for depreciation, represent cash flows. The company’s required rate of return is 10%. 
Required: 
a. 
Compute the project’s net present value. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the “$” sign in your response.) 
b. 
Compute the project’s internal rate of return.(Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the “%” sign in your response.) 
c. 
Compute the project’s payback period.(Round your answer to 1 decimal place.) 
d. 
Compute the project’s simple rate of return.(Round your final answer to the closest interest rate. Omit the “%” sign in your response.) 