Problem:
XYZ Co. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial investment would be $2,500,000 and the project would generate incremental cash flows of $750,000 per year for six years. The cost of capital is 11 percent. Calculate the following:
i. Calculate the NPV
ii. Calculate the PI
iii. Calculate the IRR
iv. Should this project be accepted?