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ach of the following scenarios is independente Assume that all cash flowx are after-tax cash flows. 1. Cabec Compamy is considering the purchase of new equipment that will speed up the process for extracting copper. The equipment will cost $3,600,000 and have a llie of 5 vears with no expected saluge vahie. The expected cash flows associsted with the project are as follows: 2. Emily Hansen is considering irvesting in one of the following two projects. Either project will require an imestment of $75,000. The expected cash revenues minus eash expenses for the two projects follow. Assume each project is depreciable. 3. Suppose that a project has an ARR of 30% (baved on initisl investment) and that the sverage net incame of the project is $120,000. 4. Suppose that a project has an ARR of 50% and that the investment is $150,000. Required: 2 Compute the ARR on the new equipment the Cobce Compary is conidering: 3. Conceptual Connection Which praject should Emily Iiansen choose tased on the ARR? Notice that the payback period is the same for both imvestments (thius equally preferred). Unlike the papaack period, explain why ARR correctly signals that ane project should be preferred ower the ather: 5. What it the werage net income earned by the project in Scenarlo d

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