Jane plans to open a bike repair shop in Scarborough. She will operate the shop for five years and then she plans to move to the coast. The repair equipment will cost $95,000 and Jane expects the after tax cash flows to be $26,200 a year.

a. What is the payback period for the project?

b. Assuming a required rate of return of 9.5% for her project what is the IRR?

c. What are the advantages/disadvantages of using each method? Explain.

NB: Please show detailed step-by-step calculations and explanations for each question (a, b & c).