6.2 Suppose Peach Paving Company invests $1 million today on a new construction project.

The project will generate annual cash flows of $150,000 in perpetuity. The appropriate annual discount rate for the project is 10 percent.

a. What is the payback period for the project? If the Peach Paving Company desires to have a 10-year payback period, should the project be adopted?

b. What is the discounted payback period for the project?

c. What is the NPV of the project?

The Average Accounting Return