Information for 1-5 Max Gluteus, is the sole proprietor of an industrial painting firm tha

Information for 1-5 Max Gluteus, is the sole proprietor of an industrial painting firm tha

Information for 1-5 Max Gluteus, is the sole proprietor of an industrial painting firm that serves petrochemical plants in the Texas Gulf Coast. He has always evaluated projects according to a maximum three-year payback. Recently he read about NPv and IRR, but did not understand any of it. He asks for your help in evaluating the purchase of a new industrial sprayer. To finance the project he will borrow funds at a before-tax annual rate of7.5%. Based on his experience and on the technical information provided by the manufacturer of the machine, he has calculated the following free cash inflows from the project over the six-year expected live ofthe machine, Industrial Sprayer Project Initial Outlay $150,000+/- $20,000 30,000 CF3 40,000 CF4. 60,000 CF5 60,000 CF6 50,000 1. What is the payback period of the project? a. three-years b. four years c. five-years d, six-years 2. What is the NPV of the project if Max is in the 30% marginal tax bracket? a. S91,740.1 b, 62,524.88 c. 103,423.17 d. 83,485.36 e. 94,540.45 3. What is the IRR of the project? a. 3.75%