Rieger International is attempting to evaluate the feasibility of investing $112,000 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 8% cost of capital.

TABLE

Year (t) Cahs inflows (CF)

1 30,000

2 40,000

3 30,000

4 30,000

5 40,000

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 tothe nearest whole percent for the proposed investment.

d: evaluate the acceptability of the proposed investment using NPV and IRR. What reccomendation would you make relative to implementation of the project?