You are tasked with evaluating a riskier-than-average capital budgeting project with the following cash flows. The project will initially cost $5,700. In Year 1, there will be a cash inflow of $2,000. In Year 2 there will be a cash inflow of $3,000. In Year 3 there will be a cash inflow of $2,000. The company has a WACC of 10%. They add 3% to WACC for risky projects and they subtract 3% from WACC for less risky projects.
a. What is this project's NPV? Accept or reject?
b. Calculate this project's Profitability Index. Accept or reject?
c. What is this project's discounted payback period?
d. What is this project's payback period?