Q1) Signal Company is considering on investing in new project. This will involve buying of some new machinery costing $450,000. Signal Company expects cash inflows from this project as listed below:
| Year 1 |
Year 2 |
Year 3 |
Year 4 |
| $200,000 |
$225,000 |
$275,000 |
$200,000 |
Suitable discount rate for this project is 16%. Illustrate calculations.
a) Determine the payback period for this project?
b) Compute the IRR for this project?
c) Compute the profitability index for this project?
d) Determine the NPV for this project?