Homework Answers
| A | |
| Investment cost | 110000 |
| Divide by Annual cash flows | 40000 |
| Payback period | 2.75 |
| B | |
| Annual cash flows | 40000 |
| X Present Value of an Annuity of $1 | 2.487 |
| Present value of Annual cash flows | 99480 |
| Less: Investment cost | 110000 |
| Net present value | -10520 |
| C | |
| Investment cost | 110000 |
| Divide by Annual cash flows | 40000 |
| PV factor for internal rate of return | 2.75 |
| The internal rate of return is greater than 4% and less than 6%. | |
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