Compute the project net present value and payback period

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Reference no: EM131953772

Lamar company is considering a project that would have an 8 year life and require $2,500,000 investment in equipment. At the end of 7 years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: The company's discount rate is 11%. Net annual cash flow from the project is expected to be $550,000. The company's discount rate = opportunity cost of capital.

A. Compute the project's net present value. Is the project acceptable?

B. Compute the project's internal rate of return. Is the project acceptable?

C. Compute the Payback period

Reference no: EM131953772

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