Basic Capital Budgeting Decisions. Consider an investment which has the following cash flows: Year       Cash Flow ($) 0              (31,000) 1              10,000 2              20,000 3...

Basic Capital Budgeting Decisions. Consider an investment which has the following cash flows:

Year       Cash Flow ($)

0              (31,000)

1              10,000

2              20,000

3              10,000

4              10,000

5              5,000

(a) Compute the: (1) payback period; (2) net present value (NPV) at 14 percent cost of capital; and (3) internal rate of return (IRR).

(b) Based on (2) and (3) in part (a), make a decision about the investment. Should it be accepted or not?