$0\mathrm{.}6$

$10$ marks

The Long$-$line Machine Company is evaluating a capital expenditure proposal that requires an initial investment of $$50,000$ and has predicted cash inflows of $$8,000$ per year for $10$ years. It will have no salvage value.

Present value factor of an annuity $n=10,I=(\%16)4\mathrm{.}833$

Present value factor of an annuity $n=10,I=(\%26)3\mathrm{.}465$

Required:

a$.$ Using a required rate of return of $16\%,$ determine the net present value of the investment proposal.

b$.$Determine the proposal's internal rate of return.

c$.$ What is the Payback period?

d$.$ What would you advice Long$-$line company?