(Multiple methods) Toys for Thoughts is considering purchasing a robot to as¬ semble its simple toys. The robot will cost $1,400,000 and will produce annual labor and quality cost savings of $180,000. The robot is expected to last 12 years and have no salvage value.

a. What is the payback period (ignore tax)?

b. If Toys for Thoughts’ discount rate is 10 percent, what is the net present value (ignore tax)?

c. Using a 10 percent discount rate, what is the profitability index (ignore tax)?

d. What is the internal rate of return (to the nearest .5 percent) (ignore tax)?