Drake Corporation is reviewing an investment proposal. Theinitial cost and estimates of the book value of the investment atthe end of each year, the net cash flows for each year, and the netincome for each year are presented in the schedule below. All cashflows are assumed to take place at the end of the year. The salvagevalue of the investment at the end of each year is equal to itsbook value. There would be no salvage value at the end of theinvestment’s life.

Investment Proposal
Year		Initial Cost and Book Value			Annual Cash Flows			Annual Net Income
0		$105,400
1		69,100			$45,900			$9,600
2		42,300			39,600			12,800
3		21,100			35,100			13,900
4		8,200			30,500			17,600
5		0			24,900			16,700

Drake Corporation uses an 11% target rate of return for newinvestment proposals.

(a)

What is the cash payback period for this proposal?(Round answer to 2 decimal places, e.g.10.50.)

Cash payback period

years

(b)

What is the annual rate of return for the investment?(Round answer to 2 decimal places, e.g.10.50.)

Annual rate of return for the investment

%

(c)

What is the net present value of the investment? (Ifthe net present value is negative, use either a negative signpreceding the number eg -45 or parentheses eg (45). Round answer to0 decimal places, e.g. 125. For calculation purposes, use 5 decimalplaces as displayed in the factor tableprovided.)

Net present value

$