You work for Industrial Inc., a publicly-traded manufacturing company with a market capitalization of $3 billion. As head of operations, you were put in charge of figuring out a way to become more operationally efficient and increase revenue at the same time. After looking at several options, you believe you found a way to achieve both goals. Your firm will have to spend $10 million (useful life five years and depreciated straight-line to zero) initially on new technology and new equipment and an additional $1 million on net working capital. You estimate this investment will create 100,000 new units sold at $45 per unit, cost $1,650,000 in variable operating costs per year, and will reduce fixed operating expenses by $400,000 a year, thus making the firm's production more efficient. You believe you can operate this project for five years, at the end of which time you estimate the market value of your equipment to be $1,000,000. The income tax rate for your company is 21% and the required rate of return for your firm is 8%.

a. Calculate the payback period, NPV and IRR - USE EXCEL