Homework Answers
| Payback | 3.23 |
| NPV | $92,283.47 |
| IRR | 16.58% |
Accept the project since NPV is positive
Workings
Payback = Year in which Cumulative CF is last negative -(Last
negative cumulative CF/ CF of next year
| Year | Cash flows | Cumulative CF |
| 0 | -420000 | -420000 |
| 1 | 130000 | -290000 |
| 2 | 130000 | -160000 |
| 3 | 130000 | -30000 |
| 4 | 130000 | 100000 |
| 5 | 130000 | 230000 |
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