A business is considering investment in new machinery at a

cost of $100,000$ on $1$ February $2010.$ The machinery will be

used to make a new product which will provide additional cash

inflows of $40,000$ for the next four years. Assume that the

cash flows arise at the end of each year.

The company policy is to depreciate non$-$current assets over

the life of the project and there is no expected residual value

for the machinery at the end of the project.

The company uses a $10\%$ and $20\%$ discount factor to evaluate

projects. The discount factors are provided:

Required:

a$)$Calculate the payback period of the project

b$)$Calculate the NPV of the project