Enterprise Inc is considering a five-year project that has a cost of 150,000. The project will generate after-tax cash flows of 33,000 in Year 1, 57,500 in Year 2, 72250 in Year 3, 80,000 in Year 4 and 82,650 in Year 5. Assume that the appropriate discount rate is 10% and that the firm's tax rate is 40%.

(a) Calculate and interpret project's payback period. If the firm imposes a payback cutoff of 2 years, should it accept the project according to the payback period criterion? Explain

(b) Calculate and interpret the projects net present value (NPV). Should the project be accepted according to the NPV criterion? Explain.

(c) Do the payback period and NPV criteria lead to the same accept / reject decision regarding the project? If not, which criterion should the firm use to decide if the project should be accepted? Explain your answer.