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E) None of the above. 4. A company produces two boat models, Montauk and Orient. Both products are being considered for major investment projects next year. Relevant data follow Orient Montauk $380,000 $424,000 New investment Expected 3-year net cash flows: Year 1 Year 2 Year 3 150,000 160,000 170,000 130,000 130,000 130,000 Use the payback period to evaluate these two investment projects. Which of the two investments is the betler choice? A) Montauk B) Orient C) Need more information to make decision. O) The Projects are equally desirable. E) None of the projects are desirable 5. A company purchases a machine for $62000. The machine has an expected life of 15 years and no salvage value The company anticipates a yearly net income of $15,000 after taxes of 29% to be received uniformly throughout each year. What is the accounting rate of return? A) 4.84% B) 48.4% C) 0484% D) 8.44% E) Need more information to compute 6. A company is considering a proposal to invest $73,000 in a project that would provide the following net cash flows: Year 1 Year 2 Year 3 Year 4 Year 5 $5,000 12,000 25,000 29,000 8,000 Compute the project's payback period. A) 3.50 years B) 4.00 years C) 4.25 years D) 4.75 years E) None of the above. 7. A company is considering a proposal to invest $73,000 in a project that would provide the following net cash flows: Year 1 Year 2 Year 3 Year 4 Year 5 $5,000 12,000 25,000 29,000 8,000 Assuming a 10% expected rate of return, what is the project's breakeven time (BET)? A) 3.50 years B) 4.00 years C) 425 years D) E) 4.75 years None of the above

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