Suppose Peach Paving, Inc. invests $1 million today on a new construction project. The project will generate annual cash flows of $150,000 in perpetuity. The appropriate annual discount rate for the project is 10 percent.
a) What is the payback period for the project? If Peach Paving, Inc.'s cutoff is 10-years, should the project be accepted? What is the NPV of the project?