Compute the net present value and payback period

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The White Bear Group (WBG) is thinking of building a plant. The plant will be used to process and ultimately dispose of the chemical residue from its production of fertiliser.

The cost of building the plant is estimated at $1,000,000 and is expected to save the cost of using the third party disposal facility of $220,000 per year. The building is estimated to have a useful life of 10 years, and it will have 100,000 disposal value. The required rate of return is 12%.

Problem 1: Compute the net present value and payback period for this investment.

Reference no: EM132912577

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