Tyler Inc is considering switching to a new production technology. The cost of t

Question

Tyler Inc is considering switching to a new production technology. The cost of the equipment is 3905930. The discount rate is 12.26%. The cash flows that the firm expects the new technology to generate are as follows:

years            cf

0                 (3905930)

1-2                0

3-5              946914

6-9              1503403

Compute the payback and discounted payback periods for the project ______ years and and discounted payback years------

what is the NPV for the project, should the firm accept or reject

what is the IRR for the project, should the firm accept or reject

Explanation / Answer

PAyback= 5.709 years

Discounted payback = 8.39 years

NPV=$437975.57, thefirm should accept the project

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