1. Capital expenditure for a complete new investment is $ 120,000,000; the expected annual net cash flows generated from investment are given below. Suppose that the companys cost of capital is 10%, calculate and comment the payback period of the project.

Years Cash flows ($000) (DF 10%)

1 40,000 0.909

2 42,000 0.826

3 50,000 0.751

4 52,000 0.683

5 55,000 0.621

SV 60,000 0.565