Reference no: EM131830330

Problem - Stewart Corporation is reviewing an investment proposal. The initial cost and related data for each year of the project's life are presented in the schedule below. Stewart assumes that the cash flows take place at the end of the year. Stewart further assumes that the investment's salvage value at the end of each year is equal to its then net book value, but Stewart does not expect there to be a salvage value at the end of the investment's useful life.

Year	Initial Cost and Book Value	Annual Net After Tax Cash Flows	Annual Net Income
0	$105,000	$0	$0
1	70,000	50,000	$15,000
2	42,000	45,000	17,000
3	21,000	40,000	19,000
4	7,000	35,000	21,000
5	0	30,000	23,000

Stewart uses a 24 percent after-tax target rate of return for new investment proposals.

Required

A. Calculate the payback period for the project. Round to the nearest whole month, if required.

B. Calculate the project's net present value. Round to the nearest whole dollar.