Question: 2. Payback method and Internal rate of Return: The Caffeine Coffee Company has estimates the following inflows. The firm has a cost of capital of

2. Payback method and Internal rate of Return: The Caffeine Coffee Company has estimates the following inflows. The firm has a cost of capital of 12%. a) Under the payback method, in what year the cost of the investment will be recupeted? b) Under the internal rate of return, should the investment be chosen with a 12% cost of capital? Show work

2. Payback method and Internal rate of Return: The Caffeine Coffee Company

2. Payback method and Internal rate of Return: The Caffeine Coffee Company has estimates the following inflows. The firm has a cost of capital of 12%. The project being analyzed is as follows ($27,000 investment) Year Cash Flow $15,000 $12,000 $9,000 a) Under the payback method, in what year the cost of the investment will be recupeted? b) Under the internal rate of return, should the investment be chosen with a 12% cost of capital

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