Problem:
Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,900,000, and the project would generate incremental free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 7 percent.
Required:
Question 1: Calculate the NPV.
Question 2: Calculate the PI.
Question 3: Calculate the IRR.
Question 4: Should this project be accepted?
Note: Please show how you came up with the solution.