Joe is considering investing in a project that would require only CAD 8,000 initial investment. Cash flows from the project are estimated as below:

Year 1: 2,500 CAD Year 2: 2,500 CAD Year 3: 2,700 CAD Year 4: 3,100 CAD

Discount rate/Expected return: 8%,

a) Should Joe invest in this project? Why or why not?

b) What is the IRR (internal rate of return) and payback period of the project? c) How did Joe figure out the appropriate discount rate as 8%?