An expansion project being considered by your firm has an


An expansion project being considered by your firm has an initial cost of $1,250,000 and expected net cash flows of $270,000 per year for the first 3 years, and $380,000 per year for the next three years. All cash flows will occur at the end of each year. Assume that the project will be terminated at the end of the sixth year. Your firm’s cost of capital is 11%. Calculate the Net Present Value (NPV), the Modified Internal Rate of Return (MIRR), the Profitability Index and the Discounted Payback, and the Equivalent Annual Annuity for this project. Should the project be accepted? Why or why not?

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Financial Management: An expansion project being considered by your firm has an
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