What are the three steps to capital budgeting?

2) Flying Widget Industries is considering buying a widget making machine for $1,000. The machine will produce cash flows of $110 for five years. In addition, at the end of five years the machine can be sold for a salvage value of $600. The firm's WACC is 8%. What is the net present value of buying the widget machine? Should the company buy the machine?

3) What is the internal rate of return (IRR) of the project in question

4)? Is this greater or less than the WACC? Do the NPV decision rule and the IRR decision rule lead to the same decision?

5) A company is considering putting in energy saving windows. Each window costs $500 and generates an energy savings of $25 a year. What is the payback period?

6) What are two deficiencies of the payback method?