A project that costs $3,000 to install will provide annual cash flows of $650 for the next 6 years. The firm accepts projects with payback periods of less than 4 years.

A project that costs $3,000 to install will provide annual cash flows of $650 for the next 6 years. The firm accepts projects with payback periods of less than 4 years.

Explanation
Some values below may show as rounded for display purposes, though unrounded numbers should be used for actual calculations.

a.
Payback period = $3,000 / $650 = 4.615 years
b.
This is more than the cutoff, so the firm would reject the project.
c-1.
r = 2% ⇒
NPV = −$3,000 + [$650 × Annuity factor (2%, 6 years)]

=−$3,000 + $650× [1.02 − 1.02 × (1.02)6]= $640.93
d-1.
r = 11% ⇒ NPV = −$3,000 + [$650 × Annuity factor (11%, 6 years)]
=−$3,000 + $650× [1.11 − 1.11 × (1.11)6]= −$250.15
c-2. & d-2.
If r = 2%, the project should be pursued; at r = 11%, it should not be.
Thank you!