Compute the a payback period b npv at 14 percent cost of


1. Consider an investment which has the following cash flows:

Year

Cash flow ($)

0

(31,000)

1

10,000

2

20,000

3

10,000

4

10,000

5

5,000

Compute the: (a) payback period; (b) NPV at 14 percent cost of capital; and (c) IRR. Based on (b) and (c), make a decision about the investment. Should it be accepted or not? Why or why not?

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Finance Basics: Compute the a payback period b npv at 14 percent cost of
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