Problem:
Fijisawa, Inc., is considering a major expansion of its productline and has estimated the following free cash flows associatedwith such an expansion. The initial outlay associatedwith the expansion would be $2,010,000, and the project would generate free cash flows of $350,000 per year for six years. The appropriate required rate of return is -0.2 percent.
1. The profitablity index of the expansion is ___?
2. The internal rate of return is ___?
3. Should the project be accepted. Why or why not?