Please explain/show work.
Susan is considering two independent projects with the same discount rate of 10 percent. Project A costs $284,700 and has cash flows of $75,900, $106,400, and $159,800 for Years 1 to 3, respectively. Project B costs $115,000, and has a cash flow of $50,000 a year for Years 1 to 3. She has sufficient funds to finance any decision she makes. Which project or projects, if either, should she accept and why?
Target Inc. has a project costing $40,000 and cash flows of $8,000, $15,600, and $22,700 for Years 1 to 3, respectively. Based on the profitability index rule, should the project be accepted if the discount rate is 9.5 percent? Why or why not?
Lane Company uses packing machines to prepare its products for shipping. One machine costs $178,000 and lasts about 5 years before it needs replaced. The operating cost per machine is $15,000 a year. What is the equivalent annual cost of one machine if the required rate of return is 12 percent?