Farm Fresh Corporation is considering whether to invest in a pasteurizing machine that costs $300,000 and will return $80,000 after tax for each of the next seven years.

After that the asset will have no value.

Compute the following items for this project:

a. Payback.

b. Internal rate of return (using a calculator, computer, or trial and error and interpolation).

c. Internal rate of return if the life is 12 years rather than 7.