Vilas Company is considering a capital investment of $190,900 in additional production facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $11,600 and $49,900, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.

Required:

1. Compute the cash payback period.

2. Compute the annual rate of return on the proposed capital expenditure.

3. Using the discounted cash flow technique, compute the net present value.