Suppose a firm is considering a project that is expected to


Suppose a firm is considering a project that is expected to cost $837,000 (= C). The project is expected to produce cash flows for three years. Cash flow in year 1 will be $381,000(= CF1), cash flow in year 2 will be $408,000(= CF2), cash flow in year 3 will be $336,000(= CF3)). If the required rate of return (= k) is 12.5%, what is the:

a) Net Present Value,

b) Modified Internal Rate of Return,

c) Profitability Index, and

d) Payback Period of the project.

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Accounting Basics: Suppose a firm is considering a project that is expected to
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