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Homework answers / question archive / Tampa International is evaluating the feasibility of investing $99,000 in a piece of equipment that has a 5?-year life

Tampa International is evaluating the feasibility of investing $99,000 in a piece of equipment that has a 5?-year life

Finance

Tampa International is evaluating the feasibility of investing $99,000 in a piece of equipment that has a 5?-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following? table:

 

a          $40,000

b         $30,000

c         $30,000

d         $20,000

e         $35,000

 

  1. Calculate the payback period for the proposed investment.
  2. Calculate the net present value? for the proposed investment.
  3. Calculate the internal rate of return?, rounded to the nearest whole? percent, for the proposed investment.
  4. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the? project?

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1) Payback Period for the Proposed Investment is 2.97 years.

2) Net Present Value for the Proposed Investment is $17,265.87

3) Internal Rate of Return for the Proposed Investment is 18.15% or 18%.

4) As the NPV is positive and IRR is greater than the cost of capital, the project can be implemented.

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