What is the projects payback period

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Briarcliff stove company is considering a new product line to supplement its range-line. It is anticipated that the new product line will involve cash investment of $700,000 at time 0 and $1.0 million in year 1. After tax cash inflows of $250,000 are expected in year 2, $300,000 in year 3, $350,000 in year 4, and $400,000 each year thereafter through year 10. Though the product line might be viable after year 10, the company prefers to be conservative and end all calculations at that time.

1. If the required rate of return is 15%, what is the NPV of the project? is it acceptable?

2. What is the IRR?

3. What would be the case if the required rate of return was 10%?

4. What is the projects payback period?

Reference no: EM132699405

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