1. Payback, NPV, and IRR Rieger International is attempting to evaluate the feasibility of investing ?$108,000 in a piece of equipment that has a 55?-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following? table: Year ?(t?) Cash inflows? (CF) Copy to Clipboard + Open in Excel + 1 ?$35,000 2 ?$30,000 3 ?$25,000 4 ?$25,000 5 ?$40,00 . The firm has a 11?% cost of capital.
a. Calculate the payback period for the proposed investment
b. Calculate the net present value? (NPV) for the proposed investment.
c. Calculate the internal rate of return ?(IRR)?,rounded to the nearest whole? percent, for the proposed investment.
d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the? project?
2. Time to repay installment loan Personal Finance Problem Mia Salto wishes to determine how long it will take to repay a loan with initial proceeds of ?$10,000 where annual ?end-of-year installment payments of ?$1,589 are required.
a. If Mia can borrow at an annual interest rate of 12?% how long will it take for her to repay the loan? fully?
b. How long will it take if she can borrow at an annual rate of 9?%?
c. How long will it take if she has to pay 15?% annual? interest?
d. Reviewing your answers in parts a?, b?, and c?, describe the general relationship between the interest rate and the amount of time it will take Mia to repay the loan fully.