70.2K

Verified Solution

Link Copied!

5. Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $115,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table: 1. The firm has a 8% cost of capital. a. Calculate the payback period for the proposed investment. b. Calculate the net present value (NPV) for the proposed investment. c. Calculate the internal rate ofreturn (IRR), rounded to the nearest whole percent, for the proposed investment. d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? years. (Round to two decimal places.) a. The payback period of the proposed investment is b. The NPV of the proposed investment is $ c. The IRR of the proposed investment is d. Should Rieger International accept or reject the proposed investment? (Select the best answer below.) . (Round to the nearest cent.) %. (Round to two decimal places.) O A. Accept O B. Reject 1: Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Cash inflows (CF) $40,000 $25,000 $40,000 $40,000 $20,000 Year (t) 2 4

Answer & Explanation Solved by verified expert

See Answer