Answer:
See below.
Explanation:
For payback period we use,
Payback = Initial outlay / Annual cash flow
Payback = 190,900/49,900 = 3.82 years
Annual rate of return is calculated as follows,
Annual rate of return = Average profit / Initial outlay *100%
Annual Rate of return = 11600/190,900) *100% = 6.08%
To calculate the NPV we discount the cash flows.
12% annuity factor for 5 years = 3.6048
PV of cash flows = 49,900*3.6048 = $179,879.52
NPV = 179879.52 - 190,900 = -$11,020.48 (negative)
Hope that helps.
