Your Aunt Laura owns Bloomfield Laundry Ltd and has £50,000 to invest in new dryers. She has asked you to advise her on the financial viability of the project and tells you that she requires a 15% rate of return. The following projected annual cash flows are expected to arise evenly throughout each year:

(a) Calculate the discounted payback period, the net present value and the internal rate of return from the purchase of the new dryers.

(b) Interpret your results and advise your aunt.

(c) Comment on any limitations of the techniques you have used.

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Year E 1 10,000 2 25,000 3 25,000 49 5 20,000 10,000