You have some cash and the opportunity to buy a small retail store downtown for . This price includes all physical assets in the retail store and the inventories . You also have the option of buying $ 700,000 of mutual funds that pay interest . The annual cash flow from the retail store operations is expected to be $ 115,000 . In 20 years you plan to retire , and you feel that the store will be sold then for $ 2 million If you wanted to make the same return on your investment as you would with the investment securities , would you buy the retail store ? To answer this question , calculate following : 1. Payback period 2. Net present value 3. Internal rate of return 4. Profitability index