A project has a cost of $60,000, and annual cash flows as shown.
Year: 0 1 2 3 4
Cash flow -$25,000 $8,500 $12,000 $13,500 $15,000
1) Assuming a required return of 10%, what is the NPV of the project? Should you accept it?
2) Assuming a required return of 10%, what is the IRR of the project? Should you accept it?
3) What is the payback period of the project? If the required payback period is 3 years, should you accept it?
4) Assuming a required return of 10%, what is the discounted payback period of the project? If the required payback period is 3 years, should you accept it?
5) Assuming a required return of 10%, what is the profitability index of the project? Should you accept it?