A firm is considering an investment that costs $500,000 and is expected to generate the following cash inflows. Calculate the NPV, assuming a discount rate of 7%, and determine the payback period.

Cash Inflows:

• Year 1: $100,000
• Year 2: $150,000
• Year 3: $200,000
• Year 4: $250,000

Requirements:

1. Compute the present value of each cash inflow.
2. Sum the present values to find the total present value of inflows.
3. Subtract the initial investment from the total present value to find the NPV.
4. Calculate the payback period.