Beacon Hall Co. is evaluating the purchase of a new machine that would dramatically increase the speed of manufacturing of their golf balls and save the company money. The cost of the new machine is $51,000.

Managements forecast of the incremental cash flows are as follows:

Year	Cash Flow
1	$20,000
2	$23,000
3	$27,000
4	$13,000
5	$8,000

Make sure to show ALL work:

1. (3 marks) What is the net present value (NPV) if the companys cost of capital is 12%?
2. (2 marks) What is the payback period?
3. (2 marks) Net present value is a common method of evaluating future investments since it incorporates the time value of money and the companys cost of capital. Discuss another advantage of the NPV method.
4. (3 marks) Discuss 2 concerns/issues with the NPV evaluation method.