Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibi

Question

Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $103,000 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: . The firm has a 8% cost of capital a. Calculate the payback period for the proposed investment. b. Calculate the net present value V for the proposed investment. c. Calculate the internel rate of return (IRR), rounded to the nearest whole percent, for the proposed investment. d. Evaluate the acceptability of the proposed investrnent using NPV and IRR. What recommendation would you make relative to implementation of the project? a. The payback period of the proposed investment is years. (Round to two decimal places.) 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.) Year (t) Cash inflows (CF) 35.000 $35.000 $25,000 $30,000 $25.000 2 Enter vour answer in the answer box and then click Check Answer parts remaining Clear

Explanation / Answer

Year cash flow Cumulative cash flow 0 -103000 -103000 1 35000 -68000 2 35000 -33000 3 25000 -8000 4 30000 22000 5 25000 47000 Payback period= 3+8000/30000 Payback period= 3.2667

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