Your company can purchase new equipment to save money on your utility bills. The cost of the equipment is $270,000, and the monthly savings will be $317. The equipment has an expected life of 25 years. Should you recommend this investment?
1. Calculate the payback period.
2. Calculate the discounted payback period at a rate of 1% (hint: annuity)
3. Calculate the Net Present Value at 1%.
4. Calculate the Internal Rate of Return.
5. Calculate the Profitability Index.