Payback, NPV, and IRR   Rieger International is evaluating thefeasibility of investing
​$86 comma 00086,000
in a piece of equipment that has a
55​-year
life. The firm has estimated the cash inflows associated withthe proposal as shown in the following​ table:
LOADING...
.
The firm has a
99​%
cost of capital.
a.  Calculate the payback period for the proposedinvestment.
b.  Calculate the net present value​ (NPV) for the proposedinvestment.
c.  Calculate the internal rate of return
​(IRR)​,
rounded to the nearest whole​ percent, for the proposedinvestment.
d.  Evaluate the acceptability of the proposed investment usingNPV and IRR. What recommendation would you make relative toimplementation of the​ project?
Questions are:
The payback period of the proposed investment is ___ years
The NPV of the proposed investment is
​The IRR of the proposed investment is
Should Rieger International accept or reject the proposed​investment?
| Year ​(t​) | Cash inflows​ (CF) | | Copy to Clipboard | | + | | Open in Excel | | + |
|
1 | ​$20 comma 00020,000 |
2 | ​$30 comma 00030,000 |
3 | ​$35 comma 00035,000 |
4 | ​$20 comma 00020,000 |
5 | ​$20 comma 00020,000 |
