Calculate the project payback period

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Question: The Sampson Company is considering a project that requires an initial outlay of $75,000 and produces cash inflows of $20,806 each year for five years. Sampson's cost of capital is 10%.

a. Calculate the project's payback period by making a single division rather than accumulating cash inflows. Why is this possible in this case?

b. Calculate the project's IRR, recognizing the fact that the cash inflows are an annuity. Is the project acceptable? Did your calculation in this part result in any number(s) that were also calculated in part (a)? What is it about this prob- lem that creates this similarity? Will this always happen in such cases?

c. What is the project's NPV? Is the project acceptable according to NPV rules?

(please do in excel with calculation)

Reference no: EM132077691

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