The marketing department of PharmaTech plc has put forward for consideration the following capital investment project, details of which are shown below.

The marketing department of PharmaTech plc has put forward for consideration the following capital investment project, details of which are shown below.
The proposed project has an initial investment requirement of £340,000, with expected inflows and outflows of £100,000 and £25,000 respectively each year for the next six years.
The investment required is not readily available in the form of working capital and therefore the company would require both equity and debt financing. The equity requirement would constitute half of the investment, with the remainder through debt financing. Equity investors require a 7% return and debt financers require 6% interest. There is also an associated risk premium of 1.5% which needs to be considered.
However, the Managing Director has concerns about the viability of the project and applies strict targets which must be achievable before the project can be accepted. In order to be considered the Managing Director requires a payback period of

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