An investment proposal is expected to have cash flows for a project as given below for each year below in the table. The cost of project is $1000 today.

a) Calculate its Payback period and Net present value using the discount rate 13%.

b)If the Corporation is expecting to return its invested capital to recover in 4 years, either the corporation should accept the project or reject it on basis of payback period.

c) Decide on the basis of NPV either project should accepted or rejected.

No of year

Expected cash flows

01

500

02

400

03

300

04

100