Caf de Paris is contemplating whether to introduce a new menu item, Parisian Delight, which requires an initial investment of 50,000 for new equipment and

Café de Paris is contemplating whether to introduce a new menu item, "Parisian Delight," which requires an initial investment of €50,000 for new equipment and marketing. The expected annual cash flows from the sale of "Parisian Delight" are projected at €30,000 for the next five years. The company's required rate of return is 10%.

a) Calculate the payback period for the investment in the new menu item.

b) Evaluate the project using the net present value (NPV) method.

c) Discuss the limitations of the payback period and NPV methods in evaluating investment projects and propose alternative approaches.