Net present value and IRR, equal cash flows (LO1, LO2, LO3, LO5). To stave off a sudden increase in competition in the cookware industry, Rahul Sheth of Delight Cookware is considering several...

Net present value and IRR, equal cash flows (LO1, LO2, LO3, LO5). To stave off a sudden increase in competition in the cookware industry, Rahul Sheth of Delight Cookware 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 taxes.

Required:

a. Based on the NPV criterion, what is the maximum amount that Rahul will be willing to spend on the project? That is, what value for the investment would lead to an NPV of zero for the project?

b. Assuming that Rahul invests $825,000 in the project. , What is the project’s payback period? What is the project’s internal rate of return?