Environmental Industries is evaluating whether to invest in solar panels to provide some of the electrical needs of its main office building in Schenectady New York. The solar panel project would cost $600,000 and would provide cost savings in its utiltiy bills of $50,000 per year. It is anticipated that the solar panels would have a life of 20 years and would have no residual value.

1) Calculate the payback period in years for the solar panel project.

2) If the company uses a discount rate of 12%, what is the net present value (NPV) of this project ?

3) If the company has a rule that no projects will be undertaken that have a payback period of more than five years, would this investment be accepted ?