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Calculate discounted payback period for proposed investment

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Reference no: EM132960015

Castle Ltd is attempting to evaluate the feasibility of investing $450,000 in a new printing machine with a five-year life. The company has estimated the cash inflows associated with the proposal as shown below. The company has 11% cost of capital.

Year Cash Inflows

1 $120,000

2. $194,000

3 $186,000

4 $191,000

5 $101,000

Problem a. Calculate the payback period for the proposed investment.

Problem b. Calculate the discounted payback period for the proposed investment.

Problem c. Calculate the NPV for the proposed investment.

Problem d. Would you, as a financial advisor opt for this investment? Why? Why Not?

Reference no: EM132960015

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