The Forbes OBGYN group purchased a new diagnostic machine for their office for $900,000. The expected cash flows for each year of the five year period is $120,000, $155,000, $186,000, $208,000, and $225,000 for the five years.

A.) What is the internal rate of return or the IRR for the project?

B.) Determine the Net Present Value for Problem 3 with an interest rate of 10%. Do you proceed or not with the project?

C.) Determine the Payback Period for the project.

22 Problem A Cash Flow Cummulative Cash Flow Year Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 IRR= 36 Problem B Excel less the investment NPV 42 Accept or do not accept the project 43 44 Problem C 45 What is the payback period for problem 3? 46 47 Payback period = Year before recovery + Year before cummulative cash flow/cash flow for year paid off 48 Payback period (show calculation) = 49 Payback period (show answer)= 50 51