The following capital budgeting proposal: $100,000 initial cost, to be depreciated straight-

line over 5 years to an expected salvage value of $5,000, 35% tax rate, $45,000 additional

annual revenues, $15,000 additional annual expense, $8,000 additional investment in

working capital, and 10% cost of capital. Calculate the following methods.

1. NPV

2. Payback period

3. Modified IRR, a required rate of return is 12%

4. Briefly compare and contrast the NPV, Payback period and MIRR criteria,

What are the advantages and disadvantages of using each of these methods?