A manufacturing firm plans to invest in new machinery:
•Cost of machinery: $500,000
•Expected life: 5 years
•Salvage value: $50,000
•Annual savings in costs: $150,000
Discount rate: 10%
Requirements:
1.Calculate the Payback Period.
2.Determine the NPV.
3.Compute the IRR.
4.Assess the profitability index.
5.Evaluate the project's viability based on NPV and IRR.