Lightfoot Ltd. is analyzing the purchase of new equipment.

The first option has a cost of USD 220,000 that is estimated to reduce company cash outflows from operations by USD 50,000 per year. Its estimated life is ten years, and it will have zero terminal disposal value. The cost of capital is 16.0%.

The second option has a cost of USD 320,000 that is estimated to reduce company cash outflows from operations by USD 75,000 per year. Its estimated life is ten years, and it will have zero terminal disposal value. The cost of capital is 11.0%.

Compare the two options and decide which one will the company should choose using the calculations below.

REQUIRED:

1. Compute the payback.
2. Compute the NPV.
3. Compute the IRR.
4. Computer MIRR.

Show your work in your spreadsheet