NorbertoGarcia,general manager of the Argentinean subsidiary of Innovation Inc., is considering the purchase of new industrial equipment to improve efficiency at its Cordoba plant. The equipment has an estimated useful life of nine years. The estimated cash flows for the equipment are shown in the table that follows, with no anticipated change in working capital. Innovation has a 16% required rate of return. Assume amortization is calculated on a straight-line basis. Assume all cash flows occur at year-end except for initial investment amounts.

Data Table:

Initial Investment $185,000

Annual Cash Flows from operations $50,000

Cash flow from terminal disposal of equipment $0

Requirements

1.	Calculate (a) net present value, (b) payback period, and (c) internal rate of return.