Reynolds Enterprises is attempting to evaluate the feasibilityof investing $85,000, CF0, in a machine havinga 5-year life. The firm has estimated the cash inflowsassociated with the proposal as shown below. The firm has a 12percent cost of capital.
| End of Year (t) | Cash Inflows (CFt) |
| 1 | $18,000 |
| 2 | $22,500 |
| 3 | $27,000 |
| 4 | $31,500 |
| 5 | $36,000 |
a.  Calculate the payback period for the proposedinvestment.
b.  Calculate the NPV for the proposedinvestment.
c.  Calculate the IRR for the proposedinvestment.
d.  Evaluate the acceptability of the proposedinvestment using NPV and IRR. What recommendationwould you make relative to implementation of the project? Why?
