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Pico's Pizzeria is considering an investment in a new pizza oven. The oven will cost $400,000 but will generate net positive cash flow of $105,000
Pico's Pizzeria is considering an investment in a new pizza oven. The oven will cost $400,000 but will generate net positive cash flow of $105,000 per year for seven years. The oven has an expected life of seven years, at which time it will have no residual value. NOTE: Click here for the Present Value Tables available for this question. A. Determine the net present value of the investment if the required rate of return is 12 percent. Should Pico make the investment in the oven? B. Calculate the internal rate of return of the investment (within 1%). C. Calculate the payback period of the investment (to one decimal place)
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