Pack & Carry is debating whether to invest in new equipment to manufacture a line of high-quality luggage. The new equipment would cost $460,000, with an estimated eight-year life and 22,000 salvage value. Based on initial analyses, the new line is expected to generate $375,000 of annual net cash flows. P&C require a 12% yield on their investment.

Use tables 26-3 (for single, lump sum amounts) and 26-4 (for annual cash flows) to calculate the following:

1) Payback period

2) NPV

3) Based on the information above, should P&C consider this investment? Why or why not?