Compute the payback period in years:

Compute the present value of the estimated annual profit:

Compute the present value of the estimated residual value:

Compute the total present value of estimated cash inflows:

Compute the net present value (NPV):

Compute the internal rate to return (IRR):

The following data are given for Encino Aluminium Company: $75,000 Initial cost of proposed equipment Estimated useful life 7 years Estimated annual cash flow $18,000 Predicted residual value at the end of the useful life $ 3,000 Cost of capital (required rate of return) 12%