Winston Clinic is evaluating a project that costs $52,125 and has expected net cash flows of $12,000
per year for eight years. The first inflow occurs one year after the cost outflow, and the project has a
cost of capital of 12 percent.
a. What is the project's payback?
b. What is the project's NPV? Its IRR?
c. Is the project financially acceptable? Explain your answer.
ANSWER
a.
Table of cash flows for the project:
		Annual	Cumulative
	Year	Cash Flow	Cash Flow
	0
	1
	2
	3
	4
	5
	6
	7
	8
	Payback
b.
	Discount rate
	NPV
	IRR
c.