Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5 year life The firm has estimated the cash inflows associated with the proposal as shown in the following table The firm has a 12 cost of capital Initial Cash flow 95000 Year ( t) Cash inflows Cumulative Cash flow 0 95000 95000 1 20,000 75,000 2 25,000 50,000 3 30,000 20,000 4 35,000 15,000 5 40,000 55,000 a Calculate the payback period for the proposed investment b Calculate the net present value (NPV) for the proposed investment c Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment d Evaluate the acceptability of the proposed investment using NPV and IRR What recommendation would you make relative to implementation of the project Why

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Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life.

Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility

of investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated

the cash inflows associated with the proposal as shown in the following table.

The firm has a 12% cost of capital.

Initial Cash flow	95000
Year ( t)	Cash inflows	Cumulative Cash flow
0	-95000	-95000
1	20,000	-75,000
2	25,000	-50,000
3	30,000	-20,000
4	35,000	15,000
5	40,000	55,000

a. Calculate the payback period for the proposed investment. b. Calculate the net present value (NPV) for the proposed investment. c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment. d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? Why?