To stave off a sudden increase in competition in the cookware industry, Rahul Sheth of Delight Cookware, Inc., is considering several cost-saving proposals to remain profitable. One such proposal promises an expected cost saving of $275,000 annually over the next five years. The required rate of return on the investment is 8%. Ignore tax effects.

Required:
a. What is the maximum amount that Rahul will be willing to invest in the project?
b. Assuming that Rahul invests the amount you calculate in a. above, what is the payback period on the project?
c. What is the project’s internal rate of return?