Calculate the payback period, net present value, and internal rate of return for Sunbeam Co. for the following investment in a new line of business (SunBeam SunBlock).

Year Cash Flows

1. $-2,000,000
2. $ 150,000
3. $1,200,000
4. $ 200,000
5. $ 250,000
6. 0-
7. $ 625,000
8. $ 175,000

Additional information:

SunBeam generally requires a 6-year payback for a project to be undertaken, and SunBeam requires at least a return of 12% for an investment to be undertaken.

Required:

1. Calculate NPV, IRR and payback period for this new project. Show your answers.
2. Should SunBeam undertake this project? Why or why not?