John Airline, one of the largest airlines in terms of passenger numbers, has enjoyed fast growth since its establishment in 1985. It has 199 Boeing B-737, with 113 backorders. Assume that a new B-737 NG costs $80 million and generates after-tax cash inflows of $10 million for each of the next ten years.

a. Find the NPV if the airline uses an 8 percent opportunity cost of capital.

b. What is the IRR?

c. What is the payback period?

d. Write a paragraph summarizing your findings in terms of making a capital budgeting decision to either pursue or reject the project.