Capital Budgeting Decision

To reduce production costs, the production department is exploring the purchase of a new piece of

equipment that will cost $$1,500,000,$ at an expected discount rate of $8\%.$ The equipment is

expected to return net cash inflows of $$250,000$ over the next $10$ years.

Based on the above information and using Excel, calculate the following items for this proposed

equipment purchase:

Net Present Value

Internal Rate of Return

Payback Period

Would you recommend investment in this equipment?