Buxton Community is expecting its new dialysis unit to generate the following cash flows:

a. Determine the payback for the new dialysis unit.

b. Determine the net present value using a cost of capital of 11 percent.

c. Determine the net present value at 20 percent and the internal rate of return.

d. Based on net present value, should the project be accepted on a financial basis?

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Year 0 Initial ($5,000,000) investment Net operating cash flows 2 3 4 5 ($150,000) $800,000 $1,000,000 $4,000,000 $5,000,000