Reference no: EM132859544

Question - Consider an investment that costs $100,000 and has a cash inflow of $25,000 (after all adjustments for taxes and depreciation) every year for 5 years. There is no change in working capital. The required return is 9%. The company normally likes to see payback is 4 years.

Required -

What is the NPV?

What is the IRR?

What is the payback period?

Should we accept the project?

What decision rule should be the primary decision method?

Would we think differently is the project's cash flows were $27,000 in years 1 and 2 and then $25,000 in years 3, 4 and 5?

Would we think differently if the project actually cost $90,000?

Would we think differently if the required rate of return was 11%?

How comfortable would you be with your recommendation?