You are considering buying a machine that requires an initial outlay of 298,000$. You estimate the project will last 5 years and will generate NCFs of 86,000$ during the first year. However, you expect the CFs to decrease by 5% for each year for the remaining four years as the machine wears out and require maintenance. You company has a required rate of return of 6.8%.
1. What is the discounted payback period of the above project?
2. What is the profitibility index?
3. What is the NPV of this project?
4. What is the IRR of this project?
Show your work.