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Calculate the Payback period and the NPV

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Reference no: EM132743491

Question - Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage. The new equipment would cost $460,000, with an estimated eight-year life and 22,000 salvage value. Based on initial analyses, the new line is expected to generate $375,000 of annual net cash flows. P&C require a 12% yield on their investment.

Required -

1) Calculate the Payback period.

2) Calculate the NPV.

3) Based on the information above, should P&C consider this investment? Why or why not?

Reference no: EM132743491

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