Charlie company is attempting to evaluate the feasibility


Charlie Company is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown below. Assume the firm has a 12% cost of capital.

                                             Year                      Cash inflows

                                                1                            $20,000

                                                2                              25,000

                                                3                              30,000

                                                4                              35,000

                                                5                              40,000

a.   Calculate the payback period for the proposed investment.

b.     Calculate the NPV for the proposed investment.

 

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Finance Basics: Charlie company is attempting to evaluate the feasibility
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