Capital Budgeting 665 Problem 16 Determine the payback period for this investment 2 Determine the net present value. Assume a discount rate of 12 percent. A 1000 The related net cash inflows for the first ten years according to a feasibility ording a food service operation to her lodging facility. The expected cost of each would Shan Williams, the sole proprietor of the Mobile Inn, is considering either adding rooms study recently completed are as follows: Years 1 2 3 4 5 6 7 8 9 10 Additional Rooms $ 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 Food Service Operation $ 20,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 220,000 Required: back? 1. Using the payback approach to capital budgeting, which project has the shortest pay- 2. What is the NPV of each project? Assume a discount rate of 10 percent. Assume a zero value for the investment at the end of ten years. Do the food Service operations