Question 1 Riggs, Inc. management is planning to spend $650,000 on a new marketing campaign. They estimate this will result in additional cash flows of $325,000 over the next three years. If the cost of capital is 17.5 percent, what is the NPV of this investment?

Question 2 Kingston, Inc. management is considering purchasing a new machine at a cost of $2,500,000. They expect this equipment to produce cash flows of $850,000 over the next five years. The new machine can be salvaged for $100,000 at the end of five years. If the cost of capital is 15 percent, what is the NPV of this investment?

Question 3 Kingston, Inc. management is considering purchasing a new machine at a cost of $4,250,000. They expect this equipment to produce cash flows of $1,250,000 over the next five years. The machine can be sold for $120,291 at the end of five years. What is the IRR of this investment?

Question 4 Morningside Bakeries has recently purchased equipment at a cost of $1,050,000. The firm expectes to generate cash flows of $500,000 from this equipment over the next four years. What is the payback period for this project?