You are considering buying a new laboratory blood analysis system that will require an initial outlay of $80,000. The system has an expected useful life of 5 years and will generate free cash flows to the hospital as a whole of $15,000atthe end of each yearover its five year life. In addition, the salvage value of the system is expected to be $10,000 based on current market conditions. Given a required rate of return of 12 percent, determine the following:

Year Cash Flow Cummulative

0 $ (80,000) $ (80,000)

1 $ 15,000 $ (65,000)

2 $ 15,000 $ (50,000)

3 $ 15,000 $ (35,000)

4 $ 15,000 $ (20,000)

5 $ 25,000 $ 5,000

Determine the following:

a. Payback period

b. NPV

c. IRR

d. Should the project be accepted?