A firm is considering a project that has an initial investment of $40,000 and is expected to produce cash inflows of $7,500 per year for 8 years. The firm’s cost of capital is 12.3%.
1. What is the project’s payback period? If the hurdle rate is 5 years, should the project be accepted?
1. What is the project’s NPV? Based on this, should the project be accepted?
1. What is the project’s PI? Based on this, should the project be accepted?
1. What is the project’s IRR? Based on this, should the project be accepted?
1. What is the project’s modified IRR? Based on this, should the project be accepted?