Wallowa Company is considering a long term investment project called ZIP. ZIP will require an investment of $120,000. it will have a useful life of 4 years and no residual value. Wallowa uses the straight-line method to compute depreciation expense. Annual cash inflows would increase by $60,000, and annual cash outflows would increase by $20,000. The company's required rate of return is 12%

SHOW YOUR WORK

1. Compute the cash payback period on this project.

2. Calculate the net present value on this project and discuss whether it should be accepted.

3. Compute the profitability index on this project

4. Calculate the internal rate of return on this project and discuss whether it should be accepted.

5. Compute the annual rate of return on this project.