Finding the payback period for the project


Problem: Project Valuation and Analysis: Suppose a new machine costs $59,000 today. It will yield $11,000 in after-tax savings each year for 7 years and you sell the machine for $4,000 in the 7th year.

1) Given an opportunity cost of capital of 8%, what is the NPV of this project?

2) What is the IRR of this project?

3) What is the payback period for this project?

4) What is the discounted payback period for this project?

5) What is the profitability index for this project?

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Finance Basics: Finding the payback period for the project
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